Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

CITY OF LONDON (WARD ELECTIONS) BILL (BY ORDER)

Order for further consideration, as amended, read.

To be further considered on Wednesday 5 July.

Oral Answers to Questions — WALES

The Secretary of State was asked—

Oral Answers to Questions — Health Service

Mr. Ted Rowlands: If he will make a statement on progress on the reform of the health service in Wales following the most recent meeting of the joint ministerial committee on health. [126693]

The Secretary of State for Wales (Mr. Paul Murphy): The purpose of the joint ministerial committee on health was to provide an opportunity for all parts of the United Kingdom to share ideas and best practices.
I know that everyone has found the exchange of experiences a useful tool for putting together plans for the future.
Following the three meetings held so far, I understand that Jane Hutt, the Assembly Health and Social Services Secretary, will be making a statement to the National Assembly for Wales in July on progress in improving the NHS in Wales and her plans for further action.

Mr. Rowlands: Following the joint ministerial meetings, can my right hon. Friend say what has emerged as the most immediate, urgent reform required in the NHS in Wales? May I suggest that one fundamental reform would be a formula to ensure that the large amount of new money that we are putting into our health service is distributed to the areas of greatest deprivation in health terms? While I very much appreciate and warmly welcome the most recent announcements of additional support for the national health service in North Glamorgan, I am sure that my right hon. Friend will agree

that they represent only the beginning of the fundamental requirement to produce a 21st-century national health service in North Glamorgan.

Mr. Murphy: Yes. I take the point that my hon. Friend makes. The joint ministerial committee dealt with the relationship between social services and the health service. In that respect, we can learn from Northern Ireland. We looked at the question of preventive medicine and, in respect of Scotland and Wales, what we can offer by way of telemedicine. There will be other important announcements in July. So far as the specific issue of deprivation is concerned, again I take my hon. Friend's point and remind the House that my hon. Friend, other right hon. and hon. Members and I met Jane Hutt this week to discuss the very points that he raised. Like my hon. Friend, I represent a valleys constituency and I understand the importance of tackling the deprivation which undoubtedly exists in Glamorgan and Gwent. I know that the Assembly has already put a great deal of resources into our valleys.

Mr. Dafydd Wigley: Has the joint committee considered the financing of health in Wales via the Barnett formula and the tendency of that formula to move towards convergence, so that if a service such as health requires more money in Wales because of socio-economic and industrial conditions, it may need money to come from outside what otherwise would have been the health block? Given the need for those additional resources, more resources for ysbyty Glan Clwyd and the £30 million required to deal with asbestos, can my right hon. Friend give an assurance that the July comprehensive spending review will include a consideration for maximising health money for Wales?

Mr. Murphy: As the right hon. Gentleman knows, my right hon. Friend the Chancellor of the Exchequer dealt with the question of health spending when he explained to the House the considerable increases in the health budget for Wales resulting from the earlier spending review. It means that Wales will receive an extra £1.3 billion over the next few years. I hope that the money will go to the areas of greatest need. The joint ministerial committee has not discussed the Barnett formula. Of course the right hon. Gentleman knows as well as I do that the Assembly Finance Secretary and others discuss these matters regularly.

Mr. Huw Edwards: In his discussions with other health Ministers, will my right hon. Friend discuss consultants' contracts? Does he recognise the concerns of my constituents who find that if they are on a waiting list they are sometimes advised that if they went privately, the procedure would be carried out much more quickly? Does he agree that what might have been necessary for Aneurin Bevan in 1948 is not suitable for the health service of the 21st century? We should not have restrictive practices which continue to allow consultants to have their mouths stuffed with gold.

Mr. Murphy: I understand exactly what my hon. Friend says and I assure him that these matters are being discussed. I hope that a number of them will be addressed in the national plan for health which will be announced later this year. At about the same time, the National


Assembly for Wales will be making its own deliberations and announcements regarding the matters to which my hon. Friend referred.

Oral Answers to Questions — Transport

Mr. Humfrey Malins: What recent discussions he has had with the First Secretary with regard to transport in Wales. [126694]

The Parliamentary Under-Secretary of State for Wales (Mr. David Hanson): My right hon. Friend meets the First Secretary on a weekly basis, and transport issues are discussed regularly. I also discuss transport issues in my regular bilateral meeting with the Assembly Environment, Transport and Planning Secretary.

Mr. Malins: Under the present Government, the people of Wales and the rest of the United Kingdom have faced huge rises in the price of petrol—so much so that the price of a litre of petrol will soon reach £1. Do the Government realise the devastating effect that that is having on people who depend on the rural economy in Wales, with many people being forced off the roads by the Government's petrol pricing policy? Will the Minister please make representations to the Chancellor on that point?

Mr. Hanson: I welcome the hon. Gentleman to Welsh questions. I know of his Welsh antecedents, and of his keen interest in Welsh matters. He will be aware that the previous Conservative Government introduced the fuel duty escalator, and that it was this Government who ended it. It was announced in this year's Budget that, beyond the automatic increase in line with inflation, there would be no increase in fuel duties. It is important to remember that revenues from any increases that do take place in fuel duties will now go straight into a ring-fenced fund for improving public transport, and that Wales will get a share of that.

Mr. Richard Livsey: With regard to public transport and especially to rail services, some of us had the opportunity yesterday to meet Railtrack representatives. That followed our meeting last week with representatives from Prism Rail, and it is clear from our discussions about an all-Wales rail franchise that investment depends on the effectiveness of the shadow Strategic Rail Authority in lobbying on behalf of the rail system in Wales. The fact that the shadow SRA has only one representative from Wales blunts the competitive edge when it comes to negotiating for investment in the Welsh rail system. What does the Minister intend to do about that?

Mr. Hanson: The hon. Gentleman will be aware that the matter has been discussed extensively. It is true that there is one Welsh representative among the 15 members of the shadow SRA, but that is on a par with the representation for Scotland. In terms of proportional population, it adequately represents Welsh interests. The Welsh Assembly was consulted on the appointment, and welcomed it.

Mr. Nigel Evans: No Labour Member standing on the subject of petrol prices, Madam Speaker? It seems that none of them really care. In rural areas of

Wales the car is not a luxury, yet the Government use taxation on petrol as a tool of rationing. In 1997, petrol cost 61.7p a litre: today, it costs 84.2p, and even more in some parts of Wales.
A report from the AA published yesterday shows that an increasing number of people are paying more in petrol taxes than in income taxes. I assume that that would include Prime Minister's chum Lord Levy but, for people on the breadline, petrol prices have hit crisis point. What discussions has the Minister had with the Chancellor of the Exchequer to explain to him the appalling effects on the economy of Wales of his stealth-tax policy?

Mr. Hanson: I would only ask, "Who introduced the fuel duty escalator?" It certainly was not this Government. We have reviewed the fuel duty escalator and have given a commitment that, beyond the automatic increase in line with inflation, there will be no increase in fuel duties. Moreover, money for public transport will be provided by the Government. That is in stark contrast to what happened under the Conservative Government. We discuss matters with my right hon. Friend the Chancellor on a regular basis, and I am pleased to say that there is more money for public transport in Wales as a result.

Mr. Evans: There is no consolation in that response for the hard-caned motorist in Wales. On top of the exorbitant petrol prices that they have to pay, motorists who use either of the two Severn bridges face the prospect of VAT being imposed, which would take the toll to about £5. That would hit tourism and the Welsh economy hard, so what representations is the Minister making to the Chancellor of the Exchequer and the Department of the Environment, Transport and the Regions to secure some protection against the wholesale fleecing of the motorist by the Government and the European Commission?

Mr. Hanson: I think we have adequately covered the fact that the previous Conservative Government introduced the fuel duty escalator, so I shall move on from that. The hon. Gentleman should know that the proposal to impose VAT on charges at toll bridges is at present subject to proceedings in the European Court. No decision is expected until 12 September 2000. The Government are looking at the matter and will discuss it in due course, when a decision is pending.

Oral Answers to Questions — NHS Waiting Lists

Mr. Nick St. Aubyn: What discussions he has had with the First Secretary with regard to the number of patients waiting over 18 months for an operation on the NHS. [126695]

The Parliamentary Under-Secretary of State for Wales (Mr. David Hanson): Both my right hon. Friend the Secretary of State and I regularly meet the First Secretary and the Assembly Health and Social Services Secretary to discuss a range of issues, including health issues and waiting lists.

Mr. St. Aubyn: I am surprised that the Minister did not refer to this morning's press release from the National Assembly for Wales, which reveals that the number of patients in Wales waiting more than 18 months for an


operation has trebled to nearly 5,000 since this Government came to power. Is that not yet another example of how this Government tax more and deliver less?

Mr. Hanson: If the hon. Gentleman had looked at the figures carefully, he would have seen that in Wales, more than 1,100 more patients are treated every week under Labour than was the case under the Conservative party when it had its chance to run the health service in Wales. When the right hon. Member for Richmond, Yorks (Mr. Hague) was Secretary of State for Wales, the annual increase in health expenditure in Wales was 1 per cent. a year. This year, under the Labour Government, there will be a 5.6 per cent. increase in health spending in Wales. I think that that answers the hon. Gentleman's point.

Mr. Llew Smith: Is the Minister aware that the south Wales valleys, including my area of Blaenau Gwent, have some of the worst health problems in the United Kingdom when it comes to heart disease, respiratory disease and cancers? Will he comment on the announcement by the Welsh Assembly that it will be another two years before it publishes its formula to tackle health deprivation? Does he accept that the first three years of the life of the Assembly will be totally irrelevant in dealing with the massive health problems in my community?

Mr. Hanson: There is keen concern in the National Assembly and in the Government about the health disparities in valley communities. I know that the National Assembly has commissioned work to see how this can be tackled. It is undertaking a considerable amount of investigation for which there is financial support, and it is looking at primary health care. Indeed, my right hon. Friend the Secretary of State met this week the National Assembly's Health and Social Services Secretary, Jane Hutt, to discuss this issue. I am sure that my hon. Friend will welcome the fact that some of the extra £1.3 billion that the Government are putting into the national health service will, in the next couple of years, find its way to meeting the needs of the important communities that he represents.

Oral Answers to Questions — Hunting

Mr. Simon Thomas: What discussions he has had with the First Secretary on the implications for Welsh farming of the proposed Bill on hunting. [126696]

The Secretary of State for Wales (Mr. Paul Murphy): I meet the First Secretary on a weekly basis and we discuss a wide range of issues including the proposed Bill on hunting and its implications for Wales.

Mr. Thomas: Does the Secretary of State agree that one of his key tasks, post-devolution, is to act as a conduit between the National Assembly for Wales and the Cabinet? In the light of yesterday's vote by the National Assembly in favour of having an option in the proposed Bill for Wales to decide on hunting at Assembly level, what representations will the right hon. Gentleman be making in Cabinet to include such a proviso in the Bill?

Mr. Murphy: None.

Mr. Alun Michael: Does the Secretary of State agree that it would be right for Members of this House, when we take a decision, to listen to the views of Assembly Members, as I have listened to the Assembly Member representing Cardiff, South and Penarth? Does he also agree, however, that we should be clear that this issue is a responsibility of this House, and that devolution means partnership between the two bodies, rather than the separation that the hon. Member for Ceredigion (Mr. Thomas) obviously wants?

Mr. Murphy: I agree with my right hon. Friend. I think that the principle of whether we ban fox hunting with hounds should be a matter for this House of Commons alone. However, I accept that there may be implications in the detail of that legislation, with regard to pest control, for example, which may well be dealt with by the National Assembly. Those issues would have to be taken into account during the passage of the Bill in its parliamentary proceedings. However, I repeat that I agree with my right hon. Friend that the principle should be a matter for this House.

Miss Anne McIntosh: Does the Secretary of State not accept that hunting and farming are inextricably linked? What assessment has he made of any potential ban on hunting on the Welsh countryside, on Welsh farming and, in particular, on those employed by the hunts in Wales?

Mr. Murphy: The hon. Lady knows that the Burns commission looked at this issue in some detail. It could not come to a firm conclusion one way or the other about the effects on the rural economy. The National Assembly and the Government are doing everything in their power to ensure that the rural economy is improved.
In Wales, at least nine very rural constituencies and many other mixed rural and urban constituencies are represented by Labour Members of Parliament. We, too, are conscious of the importance of the rural economy in our constituencies—it is not only the Conservative party which is interested in these matters.

Mr. Lembit Öpik: As the Minister knows, I support the proposals of the middle way group of MPs for the regulation of fox control, an activity regarded as essential by many mid-Wales farmers. I suspect that the Secretary of State and many of his colleagues have a different view, but will he agree that we must listen to opposing views to see whether there might be a more consensual approach to the issue than may have seemed the case in the past?

Mr. Paul Murphy: The hon. Gentleman knows that he and I disagree on the issue of fox hunting, but he also knows that one of the purposes of the Bill to be introduced is for hon. Members to have the opportunity to debate the different options available.

Oral Answers to Questions — National Parks

Mr. Michael Fabricant: If he will discuss with the First Secretary policy on tourism in relation to national parks. [126697]

The Parliamentary Under-Secretary of State for Wales (Mr. David Hanson): During his weekly meetings with the First Secretary, my right hon. Friend discusses a variety of areas, including tourism and the countryside. I also discuss these issues in my regular meetings with the Assembly Secretary with responsibility for planning, the environment and national parks.

Mr. Fabricant: The Minister will know how beautiful the Brecon Beacons and Snowdonia are; many visitors visit them every week of the year. However, he will also be aware of the plight of farming in Wales, where hill farmers' incomes have dropped by more than 40 per cent. in just three years. What steps is he taking to ensure co-existence between tourism and agriculture in our national parks?

Mr. Hanson: I am aware that the hon. Gentleman recently climbed Snowdon. I am sure that when he got to the top he could not see a Conservative seat for miles. Farming and tourism go hand in hand, and it is important that we have sustainability. The Government have put in additional resources following the recent agriculture summit that I attended on behalf of Wales. There will be a range of measures that the Government can take. It is important that we maintain stable tourism prospects. Tourism brings up to 100,000 jobs directly and indirectly into Wales and brings extra money into Wales. Farming and tourism go side by side and are both important to Wales.

Mr. Elfyn Llwyd: Given that one of the remits of the national park authority, for example, in Snowdonia is sustainable development, may I suggest to the Minister that we should look for a more productive approach to tourism and that the authorities should have a remit to encourage sustainable tourism, together with a budget so to do? Much of the work is now done by voluntary groups such as Betws-y-Coed and District Tourism Association. They do very hard work and it is well worth while, but it is all voluntary. Should not the work be done on a more definite footing?

Mr. Hanson: The hon. Gentleman may be aware that the National Assembly recently launched a new tourism strategy for Wales entitled "Achieving our Potential". The three national parks played a full part in the consultation process. They were particularly keen to look at sustainable development, and I fully support the idea of bringing extra tourists to Wales in a way that sustains the beauty that attracts them in the first place.

Oral Answers to Questions — Unemployment

Mr. Chris Ruane: What discussions he has had with the First Secretary about the number of unemployed people in Wales in May 1997 and May 2000. [126698]

The Parliamentary Under-Secretary of State for Wales (Mr. David Hanson): My right hon. Friend regularly meets the First Secretary to discuss a wide range of issues, including employment in Wales. In addition, I hold quarterly liaison meetings with the Assembly Secretary for Education and Training.
This Government's continued record of commitment to getting people off benefits and back into work is highlighted by the fact that the number of claimants on jobseeker's allowance for April has been significantly reduced to 59,170, compared with 80,322 when the Conservative Government left office in May 1997.

Mr. Ruane: I thank my right hon. Friend—I mean my hon. Friend, although he should be right hon.—for that answer. In my constituency, unemployment has fallen by 29 per cent. Youth unemployment has fallen by 69 per cent., despite the fact that I lost 800 workers when Kwik Save closed down. However, I am still concerned about the number of economically inactive people in Wales. What discussions has my hon. Friend had with the First Secretary on reducing the number of economically inactive people in our work force?

Mr. Hanson: I am pleased that unemployment has fallen by such a significant amount in my hon. Friend's constituency, thanks in no small part to the new deal and the efforts of the Government. The Government are working in conjunction with the Assembly on lifelong learning, social inclusion and active employment action—all things which I hope will help bring the economically inactive back into the workplace so that we can obtain the maximum benefit from objective 1 and ensure that unemployment falls still further.

Mr. Robert Walter: The House will be somewhat disappointed that the Minister did not give credit to the bright economic legacy left in Wales by my right hon. Friend the Member for Richmond, Yorks (Mr. Hague). That was the reason for the fall in unemployment in the past three years. But what of the future? Objective 1 status will make a contribution to lowering unemployment, but when will we see the money behind that? This week, the European Commission gave its agreement to objective 1 status for Wales. Can the Minister tell the House whether he and the Secretary of State have convinced the Treasury to give full match funding in addition to existing plans for the Welsh block grant? A simple yes or no will suffice.

Mr. Hanson: The bright legacy left to this Government was the legacy of no Tory MPs in Wales.
As the hon. Gentleman is aware, there is a process and it has been discussed. It has been explained to him on many occasions. Indeed, my right hon. Friend the Secretary of State and I have told him at every possible opportunity that the matter will be sorted out with the comprehensive spending review in July—it will be addressed at that stage.
I remind the hon. Gentleman that the bright economic legacy to which he referred resulted in 80,000 people unemployed in Wales; there are now 59,000 people unemployed in Wales—it must be brighter under Labour.

Oral Answers to Questions — Aerospace Industry

Mr. Barry Jones: If he will make a statement on the prospects for the aerospace industry in Wales, with particular reference to Raytheon Systems and BAE Systems in Deeside. [126699]

The Secretary of State for Wales (Mr. Paul Murphy): I am in frequent contact with the First Secretary on a range of issues and we discuss many aspects of industry in Wales. This has included the BAE facility at Broughton. I have also visited both companies with my right hon. Friend the Member for Alyn and Deeside (Mr. Jones).
I was pleased to hear that orders for more than 50 A3XX Airbus planes have been received. I also welcome the announcement by my right hon. Friend the Secretary of State for Defence that the UK will be placing an order for 25 A400M aircraft and that the Ministry of Defence intends to buy more of the advanced medium range air-to-air missiles, produced by Raytheon, to equip Eurofighter when it comes into service.

Mr. Jones: I am grateful to my right hon. Friend. He might agree that the Airbus factory is a jewel in the crown of Welsh manufacturing. I have to tell him, however, of the growing anger and perplexity at the grudging attitude in Cardiff with regard to the company's application for a £25 million grant. Does he agree that nowhere else in Europe would he find a national assembly that was not prepared to follow the national Government's vote of confidence by granting such moneys—certainly not in a German lander or a French département. Does he also agree that Lord Rogers's glass seagull perch cost in excess of the grant for which we are asking? We should very much like my right hon. Friend to intervene to ensure that the grant is paid, to show us that we are on the Cardiff agenda.

Mr. Murphy: I know that my right hon. Friend battles hard for his constituents and for that important facility. He is right to point out, of course, that the UK Government gave £530 million in launch investment by way of loan to BAE. I shall ensure that his points are relayed to the First Secretary.

Mr. Owen Paterson: How will the moves by British Aerospace to link up with Boeing affect the Welsh aerospace industry?

Mr. Murphy: Obviously, my right hon. Friend the Secretary of State for Trade and Industry takes a keen interest in that matter. As the hon. Gentleman is a member of the Select Committee on Welsh Affairs, he will be aware of the importance of the industry and of that facility to all the people in the north-east and, indeed, to his own constituents. I know that he supports the UK Government in doing all that we can to ensure that the facility is enlarged.

Oral Answers to Questions — Economy (Deeside)

Mr. Ben Chapman: What recent discussions he has had with the First Secretary about the Deeside economy of Wales. [126701]

The Secretary of State for Wales (Mr. Paul Murphy): I have regular discussions with the First Secretary on matters relating to the economy of Wales and have visited Deeside on a number of occasions.
The Government's decision to give £530 million launch investment to BAE is good news for the UK and, I know, for my hon. Friend's constituents.

Mr. Chapman: Does my right hon. Friend agree that the Deeside economy is unitary? To that extent, my constituents who work at BAE also welcome the A3XX and hope that regional selective assistance will be awarded. Does my right hon. Friend also agree that the environment too is unitary and that there is concern in my constituency about the Castle Cement kiln? Can he say what account has been taken of the views of my constituents in any decisions on planning permission for that kiln?

Mr. Paul Murphy: Yes I can. Obviously this is a matter for the National Assembly for Wales. It has called in the planning application, and a planning inquiry into the application will take place on 11 October.

Oral Answers to Questions — Hunting

Mr. James Clappison: What recent representations he has received about hunting with dogs in Wales. [126702]

The Secretary of State for Wales (Mr. Paul Murphy): I have received no representations about hunting with dogs in Wales. Together with my Whitehall colleagues, I am taking a keen interest in developments on these issues and I of course am sensitive to the reactions of the Welsh rural community to this matter.

Mr. Clappison: The Secretary of State spoke earlier about the details of the Burns report. What thought has he given to the conclusions of the Burns report as to how difficult it would be to control fox numbers in the upland areas of Wales in the absence of hunting with dogs as it is carried on in Wales? What message does he have for farmers who are worried about their stock, and who face a difficult enough time already?

Mr. Murphy: Conservative Members know that there will be debate on that matter in the House of Commons in a week or so. The hon. Gentleman will be able to express his views then. On the question of pest control in Wales, the hon. Gentleman knows that, in Wales particularly, the farmers themselves flush out foxes with dogs, and he is also fully aware that other methods that are used in Wales could control pests, including foxes. It is not just hunting with hounds that can control foxes. I am sure that the hon. Gentleman also knows that the great bulk of Members of Parliament in Wales—and, for that


matter, as far as we know, Members of the National Assembly—do not believe that hunting with foxes—[HON. MEMBERS: "Foxes?]—is a good idea.

Oral Answers to Questions — PRIME MINISTER

The Prime Minister was asked—

Oral Answers to Questions — Engagements

Ql. [126723] Mr. James Clappison: If he will list his official engagements for Wednesday 28 June.

The Prime Minister (Mr. Tony Blair): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I will have further such meetings later today.

Mr. Clappison: Does the Prime Minister have a view as to why crime is now rising for the first time in six years? Could it have anything to do with the fact that police numbers are going down?

The Prime Minister: Of course, crime doubled under the Government of which the hon. Gentleman was so proud. It is correct that in the last few years of the previous Government, and in the first few years of this Government, police numbers have been falling. However, as a result of the extra money that we are able to put in, which the hon. Gentleman's party would cut, by the end of the year police numbers will be rising again.

Dr. Ian Gibson: The recent announcement of two new medical schools, one in Norwich at the university of East Anglia, and the Peninsula medical school in Cornwall and Devon, should be hailed as a great success for our national health service. At the same time, the prospect of the human genome research in rolling out an understanding of the genetics of cancer means that we shall move things forward on that scientific front. Will my right hon. Friend play a major role in the development of our national cancer plan, and will he ensure that we consider, as the Select Committee on Science and Technology is doing, a national cancer institute, and perhaps 12 Royal Marsdens? Certainly, the postcode lottery for treatment with drugs and therapies must disappear.

The Prime Minister: The recent scientific discovery in relation to the human genome is immensely important not just for science but for this country, as we have played a leading part in developing it. I am delighted to say that the establishment of the new medical school at the university of East Anglia, which I know that my hon. Friend campaigned for and supported, will mean that we shall get the first brand-new medical schools in this country for 25 years. We are also increasing the number of medical school places by at least 1,000—the biggest increase in a generation—and, as a result of the additional spending in the national health service, we shall be able to make the investment not merely in bricks and mortar, and in nurses and doctors, but in medical schools as well.

What the country should know is that all that spending would be cut by the Conservatives, because of their risky tax policy.

Mr. William Hague: After three years of the mounting stealth taxes with which the Government have clobbered the hard-working people of this country, will the Prime Minister now tell the House what the price of a litre of petrol was when he took office, and what it has increased to today?

The Prime Minister: First, I think that people remember the 22 tax rises under the Conservative Government, including the doubling of VAT after they said that they would not do that. As for petrol, yes it is true that petrol prices have gone up, and it is true that, in the first two years of the present Government, they went up substantially as a result of increases in fuel duty. However, it is right to point out that of the rise in the last year—a rise of about 18p a litre—only 2p has been due to fuel duty. Sixteen pence—in other words, the vast bulk of it—has been due to the rise in oil prices, and that is affecting not just this country but countries right round the world.

Mr. Hague: Millions of people are paying the right hon. Gentleman's stealth taxes every day, and he is so out of touch that he does not know how much they are paying. The price of fuel has gone up 44 per cent. at the pump since he took office, and 34 per cent. of that is due to increases in taxation. It has gone up from 59p a litre to 85p a litre. When the Chancellor said in his Budget speech that he was indexing pensions and petrol by inflation, did the Prime Minister realise then what no pensioner could have known—that the inflation figure that he used for petrol was three times higher than the figure he used for pensions?

The Prime Minister: No. As I said in the House last week, the formula used for pension rises is exactly the same as the formula that has been used for the past 12 years. Yes, it is true that this year it has meant a small pension rise. Last year it meant a larger rise, as it will next year. The formula is the same as that used by the Conservative Government of which the right hon. Gentleman was a member.

Mr. Hague: Since the Prime Minister took office, pensions have been indexed by 8 per cent. and petrol by 34 per cent., so trying to make out that somehow that has been of advantage to pensioners is an utterly laughable proposition. Will he now confirm that when the Chancellor said that pensions would go up by inflation, he meant 1.1 per cent., and when he said that petrol would do the same, he meant 3.4 per cent., because he changed the method of calculating the petrol increase from that used by the previous Government? Will the right hon. Gentleman now confirm that when Ministers told the House on 6 April that they had not changed the methodology, they were not telling us the correct story?

The Prime Minister: That is wrong, for the reason that I have just given. Precisely the same formula is used for pensions as was used under the previous Government. As a result of the fuel duty escalator in the first two years of this Government, fuel duties went up, as was the case


under the previous Government, of which the right hon. Gentleman was a member. There is a choice, it is true. We decided that we had to erase the deficit that we inherited—£28 billion in borrowing and a doubled national debt. As a result, we have interest rates that average 6 per cent.—under the previous Government, they averaged 10 per cent.—and we can now make the extra investment in schools and hospitals. Is the right hon. Gentleman saying that he would not have taken those measures on petrol, and would therefore have cut the money spent on schools and hospitals?

Mr. Hague: If the right hon. Gentleman wants me to give him a Budget, he can hand over as First Lord of the Treasury any day. I am asking him a question to which he has not given an adequate answer, as everyone who is watching knows. It turns out to be the case that the switch to a forecast figure for petrol duties was introduced by this Chancellor. It is no good the Prime Minister talking about the escalator, because petrol duties have gone up twice as much in the past three years as in the previous three years. When he abandoned the escalator, he got into a lift instead. For people who have saved up for their cars, people in rural areas who need a car, and people who are old or disabled and need a car to get about, is it not bad enough that he fleeces them at every opportunity, without using every opportunity to cover it up as well?

The Prime Minister: Of course, the fuel duty escalator was introduced by the previous Government. It is correct that we kept it. Petrol prices have gone up significantly, and of course that is difficult for people in rural areas and those who go long distances by car. However, it is worth pointing out that, although it is correct to say that it may cost more than £50 to fill up the average 1600 cc motor car in England, it is also correct to say that it costs more than £40 to do so in France and Germany, and that France has motorway tolls and vastly higher income taxes. I accept that we had to put petrol duty up, but there was a choice: either we could cut the deficit and make the investment in public services, or we could decide not to take those measures. I do not believe that we would have 1 million extra jobs in the economy or interest rates at 6 per cent. if we had not taken those measures. If the right hon. Gentleman is telling us that he would cut fuel duty, that means that he would also cut the money that we are putting into schools, hospitals and transport.

Mr. Hague: This Government cannot even tell the truth about the duty on a litre of petrol. They are so busy with trivia such as banning musical chairs, bailing out the dome, telling the royal family to move house and counting the number of fat people on television, that they have forgotten what really matters to people in this country. Is the time not coming when the people who cannot now afford to run a car will take their revenge on the people who cannot manage to run a Government?

The Prime Minister: Let us see who managed the economy best. The party now in government has created 1 million extra jobs, got interest rates of 6 per cent., managed to halve the deficit that we inherited—in fact, get rid of it—and taken a million children out of poverty.

Was it our party or the right hon. Gentleman's party which, in government, doubled the national debt, had interest rates—[Interruption.]

Madam Speaker: Order. Stop it.

The Prime Minister: It is the comparison that Conservative Members do not like.
Which party had interest rates averaging 10 or 11 per cent., took unemployment figures over 3 million, had manufacturing output cut by 7 per cent., devalued the national health service and our schools, and doubled crime and poverty? [HON. MEMBERS: "Go on."] Yes, I could go on for a long time, as there is a sad story to tell. There will be a choice, and on the day that there is, people will compare the record of this Government with that of the Government of which the right hon. Gentleman was a member—and they will know that the Tories are worse and more extreme than ever.

Mr. Anthony D. Wright: I am sure that the Prime Minister will join me in welcoming the 18 per cent. drop in unemployment in my Great Yarmouth constituency. The statistic for the young unemployed is even more impressive, with a drop of more than 50 per cent. in the past three years. Despite that good news, however, Yarmouth's unemployment rate is one of the highest in the country. Indeed, it is three times the East Anglian average. Will the Prime Minister outline to my constituents what the Government intend to do to build on the good news that we have had over the past three years and ensure that sustainable jobs are created in areas such as Great Yarmouth?

The Prime Minister: Of course I am delighted that 1,000 people have started on the new deal programme in my hon. Friend's constituency, and nearly 500 of them have gained jobs. [Interruption.] For those Conservative Members who are shouting, I shall repeat that they would abolish the new deal. People who have got jobs under this Government know that they would have those jobs taken away by a Conservative Government. Moreover, my hon. Friend's constituents, whose mortgage rates have come down from the appalling levels of the early 1990s under the Conservatives, know that under the Conservative boom and bust policy, they would go back up again.

Mr. Charles Kennedy: Can the Prime Minister confirm that health action zone funding will be maintained in 2000–01 at the levels originally set and announced by the Government?

The Prime Minister: The health plans will be set out by myself; I am covering the July plan in a few weeks' time. We shall set out the details of our spending proposals. Health action zones are immensely important and do a very good job in many local areas, and obviously we want to continue them.

Mr. Kennedy: I think that the whole House would want to continue them—[Interruption.] I was just trying to be inclusive. If the position is as optimistic as the Prime Minister says, why, in a letter that came into the public


domain today, did the Minister of State, Department of Health, the hon. Member for Barrow and Furness (Mr. Hutton) state:
I appreciate the programme funding—
for 2000–01—
is less than previously indicated?
The accompanying notes from civil servants state:
We … will, in effect, be announcing cuts to anticipated Health Action Zone Budgets this year.
They go on to say in ministerial advice:
This will not be received as good news and we do not recommend a press notice.
Why do the Government continue to announce funding that does not exist? Will the Prime Minister not admit that this is another attempt at the triumph of spin over substance?

The Prime Minister: That is absurd. The Government have announced new money for the national health service, and it is already going into the service. When we came to office, health authorities had huge deficits, which, as a result of the new money, are largely being cleared. There are already 7,500 new nurses, and there are thousands more to come. There are also extra doctors, accident and emergency departments are being renovated, and extra spending has been announced not only for this year but for future years.
As for the right hon. Gentleman's point about health action zones, I shall look into that for him, but I think that he will find that, when taken with the money given to health authorities in those areas, the funding has gone up, not down. I shall set it all out for him in a letter.

Oral Answers to Questions — Ministerial Visits

Mr. David Taylor: When he next plans to visit North-West Leicestershire.

The Prime Minister: I have no immediate plans to do so.

Mr. Taylor: As one of a north-west Leicestershire family who ran the post office in my home village for most of the 20th century, may I ask my right hon. Friend how likely it is that the extra income from community banking, electronic commerce and online government will compensate local offices for the losses that will result from automated credit transfer? When he does visit us, will he reassure rural and urban communities that the local post office network really is safe in his hands?

The Prime Minister: The proposals to be announced by the Secretary of State for Trade and Industry later today will do that, and I think that they will be widely welcomed. It is important that we set out a plan for post offices that will allow them to modernise and develop, which is essential, and ensure that in every way possible, we protect rural post offices for the local communities that they serve.
I say to my hon. Friend that in this exercise we have had to work closely with people in both rural and urban post offices to devise a plan that accords not only with people's desire to keep their local post offices, but with

reality. Every year, 500,000 more people get their benefits paid into their bank accounts. We have to take account of that in any plans for post offices, and we will. When my right hon. Friend sets out his plans later, the House will see that they will ensure that post offices have a future. That will be yet another dividing line with the Conservatives, because their tax policy would not allow them to fund the programme that we will be funding.

Oral Answers to Questions — Engagements

Dr. Phyllis Starkey: May I tell my right hon. Friend that in October 1999, the waiting time for a cataract operation at Milton Keynes general hospital in my constituency was 12 months, whereas now, thanks to additional Government funding for an extra ophthalmic surgeon, the waiting time has been reduced to between four and six months? That is much better, although there is still room for improvement. Does that not demonstrate that the best way to reduce waiting lists in the NHS is to use public money directly to recruit extra doctors and nurses, and not, as the Conservative party proposes, to waste £1 billion on tax relief for private health insurance, half of which would be for those who can already well afford to pay for private insurance?

The Prime Minister: I am delighted that the waiting times for cataract operations are coming down in my hon. Friend's area, although as she rightly said, there is still a considerable way to go. Of course, the Conservatives want to drive everyone needing non-urgent treatment, such as a cataract operation, out of the NHS altogether. We still have not had an answer from them as to how their £1 billion plan for private medical insurance would be funded, if it is not to be funded from cuts in the NHS.

Mr. David Lidington: When the Prime Minister next enjoys a weekend in the Buckinghamshire countryside, will he commit himself to preserving that countryside for my other constituents by overturning the unwanted and excessive housing targets that his deputy now wants to impose?

The Prime Minister: First, let me point out that the targets put forward by the Deputy Prime Minister are lower than those for many of the years of the previous Conservative Government, of which the hon. Gentleman was a proud supporter. [Interruption.] That is entirely true. Secondly, we did not accept the original plans, and we have increased the amount of building that must take place on brownfield, rather than greenfield, sites.
In addition, obviously we are trying to make sure that we do not end up with no houses being built in the south-east at all, since that would put extraordinary pressure on the people already living here. A balance must be struck, and most people believe that the Deputy Prime Minister, in accepting figures well below those in the plans put forward by the independent body, has steered a wise course and reached a sensible compromise.

Ms Margaret Moran: Is my right hon. Friend aware of the recent opening by Vauxhall Luton of a £5 million research and development engineering technology centre, and the investment of £189 million in United Kingdom plant? Will he join me


in congratulating all the workers of Vauxhall Luton on the work that they have put in to secure that investment? Does he not agree that that is a significant boost to UK manufacturing industry, which stands in sharp contrast to the actions of the Conservatives, under whose regime 26 million manufacturing jobs were lost—[Interruption.] Manufacturing output dropped by 28 per cent., and they constantly talked down UK manufacturing industry?

The Prime Minister: I think that it was actually 2.6 million jobs that went under the previous Government. [Interruption.] Conservative Members seem to be rather proud of that record. There is good news not just from Vauxhall but from Leyland Trucks, too. Manufacturing has been through a difficult period indeed, but the single most important thing for the whole of our industry is to maintain stability in inflation and in the interest rates in the economy. All the manufacturers whom I speak to—even those who are worried about the high level of sterling recently and about manufacturing—accept that the last thing they need is a return to the policies of the late 1980s and early 1990s, when interest rates were at 15 per cent. for a year, and a million or more manufacturing jobs went in a couple of years.

Mrs. Teresa Gorman: Will the Prime Minister confirm the story in The Guardian today that his press secretary, the fabled Alastair Campbell, has instructed every Department to produce at least two good news stories every week for two months during the summer recess, to cheer up the Labour party's image? Is it not time that that gentleman was taken off the public payroll and put back in on the payroll at Millbank, where he belongs?

The Prime Minister: I agree with the hon. Lady; it was an entirely redundant message since there is lots of good news that we can tell people about—for example, the record literacy and numeracy results in primary schools, the additional spending in 11,000 schools up and down the country, the 250,000 jobs got through the new deal, the extra money for pensioners, the extra money for children and child benefit, the extra money for schools and the extra money coming for the police after the comprehensive spending review. I agree that he need not have sent that out; we can do it ourselves.

Maria Eagle: Will my right hon. Friend welcome, as I will, the close of business in the House today, by which time, if all goes well, the Fur Farming (Prohibition) Bill will have completed its passage? Will he join me in ensuring, to the extent that he can, that those in the other place do not interfere too much with the Bill, so that the Government can fulfil yet another pre-election promise?

The Prime Minister: Certainly, to the extent that I can, I will.

Mr. Paul Tyler: Does the Prime Minister accept that No. 10 Downing street is an historic building of considerable public interest? Does he not think that, as he is the head of a so-called modern

Government, it is about time he got out? Is it Government policy to ask the present occupant of Clarence house to vacate it—and when will all this end?

The Prime Minister: I think that we should all stay put.

Mr. Vernon Coaker: Will my right hon. Friend take this opportunity to encourage local authorities such as Tory-controlled Gedling borough council to use the new powers that the Government have given them to tackle anti-social behaviour in their communities? People are fed up with the yobs. They are fed up with bad neighbours. They want something done about it. We have given local authorities the powers. Is it not about time that they used them?

The Prime Minister: I entirely agree with my hon. Friend. A breach of such an order is a criminal offence with a maximum penalty of five years in prison. Although the use of those orders is now on the increase, far more could be done. There is nothing worse than if a family has to live in an inner-city estate or in a town next to families that perhaps are engaged in criminal activity, drug dealing and all the rest of it. They make their lives absolute hell, and those anti-social behaviour orders are there to be used. I urge all local authorities to use them, particularly the Conservative ones that are slow to do so. They are there for the protection of the public, and the more we use them, the better.

Mrs. Ann Winterton: Will the Prime Minister have a word with the Department of Health about its disingenuous policy of, on the one hand, stating that it opposes euthanasia, while, on the other hand, it allows passive euthanasia by the withdrawal of medical treatment, including food and fluids, from those who are not dying, thereby making even more vulnerable the frail, the elderly and the disabled?

The Prime Minister: I do not believe that that is the policy of the Department of Health at all.

Mr. Jim Fitzpatrick: Yesterday, the right hon. Member for Bridgwater (Mr. King) and Sir William McAlpine performed the topping-out ceremony at EXCEL, London's new international conference and exhibition centre in docklands in my constituency, barely a year after the Deputy Prime Minister performed a ceremony at the beginning of building. EXCEL opening in November will be a key element in the regeneration structures for east London. However, one of the more eagerly awaited pieces of transport infrastructure is the channel tunnel rail link coming into Stratford. Can the Prime Minister reiterate the Government's commitment to the building of phase two of CTRL, which is important not just to London and the Thames gateway area, but to the whole of the UK, to provide fast rail access to Europe?

The Prime Minister: I can certainly confirm the commitments that we have made. Of course, that is an infrastructure project that will bring not just better infrastructure but jobs to the area. I know that my hon. Friend has been working hard with other hon. Members


in regenerating that particular part of London. As a result, literally thousands more jobs are being created. That is good for local business and local people.

Mr. Elfyn Llwyd: Will the Prime Minister confirm Lord Wakeham's assertion, as reported in The Independent today, that he came under considerable Government pressure to fudge his report on the House of Lords?

The Prime Minister: No, I will not confirm that at all. I thought that it was a good report, but it was Lord Wakeham's report.

Mr. Michael Clapham: My right hon. Friend will be aware that the Health and Safety Commission recently announced its future health and safety strategy, including 10-year targets. Those targets are to reduce ill health in the work place, to reduce fatalities and to reduce the number of major injuries. Does he agree that those targets need teeth, that the Government should look towards legislation that will support sanctions against people who breach health and safety legislation, and that named directors of companies should be responsible for health and safety policy?

The Prime Minister: I agree with my hon. Friend that that is a serious issue, which is why, a short time ago, the

Deputy Prime Minister set out a new strategy that sets targets for improvement over a period of 10 years. The cost to the economy of health and safety failures is some £18 billion a year. Fatal accidents cost 400 people a year their lives, and 25,000 have to give up work due to accidents, never to return, so I entirely agree with my hon. Friend that it is a very important issue. We will work with employers, trade unions and others to improve the situation.

Mr. Andrew George: Bearing in mind the fact that 11 men have lost their lives in the fishing industry in my constituency in the past three and a half years, leaving 23 children without fathers, does the Prime Minister understand just how disappointed the industry was when the Minister of Agriculture cut fishing safety grants in May last year? People were encouraged when the Deputy Prime Minister promised to reinstate them a year ago, but there has been no action since then. Will the Prime Minister intervene to ensure that fishing safety grants are improved, so as to improve fishing safety throughout the UK?

The Prime Minister: First, I express my sympathy to the families of the hon. Gentleman's constituents who lost their lives. Secondly, on the forward-spending plans of the Government, I am afraid that he will have to wait for the comprehensive spending review.

Post Office Network

The Secretary of State for Trade and Industry (Mr. Stephen Byers): With permission, Madam Speaker, I wish to make a statement on the post office network. Post offices are a vital part of the fabric of our country. They serve 28 million people every week, performing a vital role in local communities, whether they be rural or urban.
However, the Post Office also faces challenges. Its traditional work needs to respond to the changing requirements of customers, to changes in society and to the opportunities arising from new technology. Last October, my right hon. Friend the Prime Minister asked the performance and innovation unit to draw up a strategy for the future of the post office network. The PIU's report is being published today. Copies are being placed in the Library of the House and will be available from the Vote Office. The Government accept all the report's 24 recommendations. Working with the Post Office and the National Federation of Sub-Postmasters, we will implement the measures proposed in full. We will back them with financial support—we will be setting aside ring-fenced funding as part of the spending review to be announced in July.
The Post Office is the largest retail network in Europe. More than nine out of 10 people live within a mile of a post office. However, for too long the post office network has been a neglected national resource. Now is the time to harness its full potential and to develop it in totally new areas.
The PIU report identifies three such areas where developments should take place, made possible only by the investment by this Government of £500 million in modern online computer systems for every one of the 18,500 post offices throughout the country. The three developments are, first, to establish a universal bank; secondly, to provide internet access and exploit e-commerce; and thirdly, an enhanced role in government services.
First, the Government are aware that our decision to move to a system of automated credit transfer between 2003 and 2005 has caused concern. However, people were already voting with their feet and choosing to have their benefits paid into their bank accounts. Today, I can guarantee that, even after the move to ACT, pensions and benefits can still be paid in cash in full at a post office if that is the choice of the individual pensioner or benefit recipient.
The universal bank outlined in the PIU report would provide the means of achieving that objective. It would ensure that all benefit recipients and pensioners, now and in the future, could continue to use post offices to receive their cash. It would be a post office-based solution, as called for by the National Federation of Sub-Postmasters.
Today in Britain, about 3.5 million adults have no bank account. The universal bank would bring those people into the banking mainstream by providing basic banking services. Customers of the universal bank would be able to get out cash at any post office and use cash machines to take out money. They would be able to set up direct debits to pay bills, enabling them to benefit from discounts on gas, electricity, telephone and other bills. That would be a real bonus to people on low incomes who, at the moment, are the unbanked.
Secondly, we want to provide internet access and to exploit e-commerce through the post office network by installing internet terminals in front of the counter and ensuring that post office staff are trained to provide assistance. Post offices also have an opportunity to market themselves as a convenient local place for people to collect goods that they have ordered over the internet.
Thirdly, we want an enhanced role in government services for the post office network. Post offices have traditionally been places where people can do a range of government business, from renewing a car tax disc to getting a fishing licence. That role will be further strengthened with the PIU's recommendation that post offices become one-stop shops—general government practitioners—for advice and information on government services. We shall support pilot projects on this and on internet access.
This vision of the 21st century for the Post Office applies to the entire network. However, the PIU report also identified the particular needs of the network in urban areas and in rural communities. The rural post office network has been slowly contracting over the past 20 years; the Government are committed to ensuring that it is maintained. The importance of rural post offices cannot be underestimated. Often, they are the last remaining local shop, providing a vital service and also acting as a focal point for the local community.
The maintenance of such services is, above all, a tribute to the invaluable role of sub-postmasters and mistresses, who often provide to their communities much more than is required or expected of them. The Government have already made provision through the Postal Services Bill to provide financial assistance to post offices, where necessary. In order to protect rural post offices, the Government will place a formal requirement on the Post Office to maintain the rural network, and also to prevent any avoidable closures of rural post offices. Our commitment is clear: to maintain the rural network and prevent any avoidable closures in that network.
An unavoidable closure would be when no one was prepared to take over from a departing sub-postmaster, or where an associated retail business was no longer commercially viable. Otherwise, the network will be maintained. The PIU report recommended that the requirement to maintain the rural network should apply in the first instance for a period of six years. We accept that recommendation. During this period, the Postal Services Commission, together with the Consumer Council for Postal Services, will monitor the network, and the commission will report annually to me on the rural network.
At present, the Post Office defines a rural post office as one which covers 6,300 inhabitants. Currently, 7,500 post offices are covered by that definition. However, the Countryside Agency defines a rural post office as one serving a settlement of 10,000 or fewer people. Around 10,000 post offices would come within that definition. I am pleased to inform the House that, for the purpose of the policy of protection from avoidable closures, we shall apply the wider definition and thereby cover nearly 10,000 post offices.
It is not just in rural areas that post offices play an important community role. We want to maintain convenient access and improve the quality of post offices in our towns and cities, as well as in the countryside.


Under pressure from changes in the pattern of retailing, the quality of many post offices and associated retail business has declined in urban areas over the years. We believe that the best way to address that is for the Post Office, working closely with the National Federation of Sub-Postmasters, to build bigger and more extensive offices, reversing years of underinvestment. As the PIU recommended, we will encourage them to do so.
Post offices in deprived neighbourhoods and estates have a particularly important role, often providing the basis for the only local shop. Our aim is to ensure that people in these areas, where there are few other facilities, continue to have access to high quality post offices, preferably co-located with good shops. To support that, we will set up a new fund to improve the quality of post offices in deprived urban areas, thereby better serving the needs of the local community. Uses of the fund would include installing security measures and modernising premises.
These proposals provide a significant package for guaranteeing access to post offices and enabling them to provide new services which meet the changing needs of customers. By providing financial support for these initiatives, the Government are backing a viable, sustainable future for the post office network. However, the Post Office itself needs to respond to the challenges. The PIU report shows that much more needs to be done: to maximise the commercial potential of the network; to improve efficiency; and to raise the quality of post offices.
The vision set out in the PIU report, which we support, is closely in line with that of the general secretary of the National Federation of Sub-Postmasters, with whom we have been in close dialogue. The package announced today complements the measures in the Postal Services Bill. Post offices and their customers, in all areas, will benefit from the wide range of opportunities offered by a modern online computer system in every post office and proposals to establish the universal bank, internet learning and access points and general government practitioners.
Customers in all urban areas should benefit from bigger and more expensive post offices offering a wider range of services. Those in rural areas will also benefit from the requirement to maintain the rural network. Those in inner cities and estates will benefit from measures to ensure that post offices provide good local shops which serve the community.
This announcement will ensure that people throughout the country—in rural communities and in our cities and towns—have convenient access to a post office providing quality services. It will offer the opportunities that the Post Office needs to face the future with confidence, and to build a network that can thrive rather than just survive in the 21st century. I commend the statement to the House.

Mrs. Angela Browning: I welcome the fact that the Secretary of State is making a statement on the sub-post office network. It would have been so much better if he had found some solutions to the problem that he caused when he scrapped a scheme last year simply by circulating a letter on a "Dear colleague" basis. We know that his announcement means that £400 million of income will be removed from the sub-post office network from the year 2003.
As a result of the uncertainty that the Government have created among sub-post offices, over the past year there has been an escalation in sub-post office closures to about 500. That uncertainty has been demonstrated by the sub-postmasters themselves, who attended a rally on 12 April and presented one of the biggest petitions ever to a Government, when 3 million signatures were handed in at No. 10 Downing street.
We have devoted two Opposition days to debating this matter. The Secretary of State's statement is light on detail and particularly light on fact and financial detail. I hope that, when he comes to answer specific questions, he will not duck the issue but will say how much money is on the table as part of the package that he has announced. Can he guarantee that what he has read out will make up the £400 million shortfall that the Post Office will suffer from 2003?
On the universal bank, will the Secretary of State please explain—I have asked this before, and we really need to hear the detail now—where the charges will fall? Supposedly, 3.5 million new account holders will be members of the new bank. Do the charges fall on the customer, on the Post Office, on the bank or on the taxpayer? Who will bear the transaction costs of money from existing bank account holders who may still want to draw their money from their post office? He and the Government have given guarantees in the past that those people will not have to bear the transaction costs. Who will bear them?
The Secretary of State paid much attention to the rural post office network. Some of the most fragile post offices are in rural areas. What minimum number of sub-post offices will he guarantee to keep open in the network?
The right hon. Gentleman mentioned information technology. Conservative Members welcome the opportunities that IT offers the sub-post office network, because it was our policy to put computers into sub-post offices in the first place. Given the increase in e-commerce and, we hope. the rapid escalation of home deliveries—but to a population in which so many people are now out during the day—is it his intention to allow the sub-post office network to handle parcels from private sector parcels companies other than Parcelforce, as that would certainly increase the sub-post office income?
What additional government services has the Secretary of State already discussed in relation to this one-stop shop that he talks about? The Government are pledged to deliver electronic government by 2005–50 per cent. is supposed to be ready by 2003—so Departments must be well advanced in knowing what services they will deliver electronically. Rather than just giving generalities, will he tell us exactly what Government services the sub-post office network will be allowed to tender for, so that people can plan for their financial future and know where their income is coming from?
We have heard a lot from the Secretary of State about subsidies. Exactly what does he mean by the Government using subsidies? The National Federation of Sub-Postmasters, with which he says he has been in contact, has said in terms that it is looking not for subsidy but for genuine alternative forms of income. If he intends to subsidise individual post offices, what analysis has he made of the distortion that such a subsidy would create for either the next nearest sub-post office or, for that matter, for the village shop, which may not be a sub-post


office but may sell products in competition with it? Is he not at all concerned about the small business aspect of creating artificial competitive distortions in the market?
I know that sums are not the Secretary of State's strong point, but he will have to address the figures eventually. The Post Office had to bear a £571 million write-down as a result of his policy change in this financial year's annual report. Will the sums that he is talking about, albeit in general terms, be another write-down in next year's accounts for the Post Office itself, or is this some new money that he has got from the Chancellor, which the taxpayer will have to provide through the Treasury?

Mr. Dennis Skinner: Is she for it or against it?

Mr. Byers: Now we know why 3,000 post offices were closed while the Conservatives were in government. Are they for it or against it? Who knows from the hon. Lady's contribution?
The hon. Lady asked some specific questions. The wonderful benefit payments card has been held up as the way forward. When we came to office, it had already overrun by three years, was over budget and was set to be obsolete by 2007. The Conservatives may deny it, but that was the reality. The hon. Lady knows it, and the right hon. Member for Hitchin and Harpenden (Mr. Lilley) knows it too, because he was the architect of the chaos that surrounded the benefit payment card.
The hon. Lady is right to say that there is difficulty with delivering goods over the internet because fewer people are at home during the day. That is because 970,000 more people are in work as a result of our policies.
The hon. Lady talks about the views of sub-postmasters. We shall wait to hear what they say about this afternoon's announcement. I am confident that, as members of a reasonable organisation, they will warmly welcome my statement and the PIU report because they provide a real vision for the future of the Post Office.
The hon. Lady raises the important issue of transaction costs. We know that, at the moment, a transaction cost is paid by commercial agreement between the federation, the Post Office and the banks if they are acting as an agency. That will not change when a universal bank is introduced, but those bodies will enter into commercial negotiation.

Mr. Nick Gibb: What about the 17p?

Mr. Byers: The hon. Gentleman talks about 17p. In fact, for a pension the figure is 13p at the moment. He should get the facts right if he can. The figure will be part of the transactions entered into, and it is appropriate that that should be so.
We have made provision in the spending review to underpin the report's recommendations, and that will be made clear in July when we announce those proceedings.
The Conservatives' difficulties on the Post Office were very clear from the hon. Lady's response. Their policy was to privatise and break up the Post Office. We have given it commercial freedom and we will support modernisation and the development of new areas of

business. The message for the Post Office and rural and urban communities that care about it is clear: neglect, decline and closures under the Conservatives; vision, investment and a future under Labour.

Mr. Frank Field: I warmly welcome my right hon. Friend's statement. Does he agree that the image that the media continuously put over of most vulnerable post offices being in the countryside is not totally accurate? Will he tell the House of his Department's analysis of measuring vulnerability by size of income that sub-post offices receive from social security transactions? On that analysis, do not the sub-post offices in his and my constituencies rank about 70th in the vulnerability league stakes? Will he therefore give an undertaking to those of us who represent inner-city areas that, when he gets down to the detailed implementation of his welcome announcement, he will pay particular attention to ensuring that inner-city post offices survive, as should rural post offices?

Mr. Byers: My right hon. Friend raises a very important point. In today's announcement, we draw particular attention to the important role that post offices play in deprived urban areas such as his constituency and mine, not just as a post office but as part of probably the only commercial retail outlet serving some of our most depressed estates. He is right to point out that they are the most vulnerable on the question of benefit transactions. We will be providing financial support to underpin post offices in those areas.
Many of my right hon. Friend's constituents and mine will be among the 3.5 million people who are unbanked and therefore cannot take advantage of direct debits and the cuts in bills for electricity, gas, the telephone and so on that that brings. The universal bank will, for the first time, allow those 3.5 million people to enjoy those benefits. The ability to enjoy the advantages of reduced basic utility bills, which many in this House take for granted, will make a huge difference to families and people on low incomes. Extending such benefits will be beneficial to individuals, communities and the Post Office as well.

Dr. Vincent Cable: I welcome the elements in the statement which give a firmer commitment to both public subsidy and the preservation of the network, and identify useful new sources of income generation. A similarly comprehensive approach adopted 20 years ago at the beginning of Conservative rule might have prevented the closure of many of the 4,000 branches which have closed.
How much of the lost £400 million income in 2003 will now be replaced by a combination of subsidy and new sources of income? I appreciate that the Secretary of State cannot identify the subsidy sum before the public expenditure review, but what will be the gap in the cash flow as a result of those two combined elements?
Secondly, can the right hon. Gentleman be more specific about his commitment to the preservation of the network? He said that there will be a guarantee for 10,000 sub-post offices. What will be the status of the other 8,000, many of which are loss-making? In particular, what is the status of those in urban areas, which have just been referred to? The right hon. Gentleman will have discovered in Tottenham last week that there is a lot of


sensitivity about the closure of sub-post offices. Clearly, many of those will be modernised, but of those that are not, how many are likely to shut, and what provisions are there for preventing the closure of sub-post offices in inner-city areas?
Thirdly, will the right hon. Gentleman say more about what is meant by a jointly owned universal bank? What is the relative shareholding of the Government and the private banks? What will happen if a Barclays cash machine is installed in a sub-post office as part of the joint project? Will customers pay Barclays charges, which, as he knows, the bank is determined to impose in defiance of the anti-cartel provision of the Competition Act 1998?
Finally, I welcome the internet provision, particularly taking advantage of the logistics opportunities of the Post Office. But how will internet be provided in the many remote areas where there are no ISDN lines? How will the internet be universally available for the post office network?

Mr. Byers: The hon. Gentleman is right to say that, had our comprehensive approach been adopted some 20 years ago, the network would be in a far stronger condition than it is at present.
The hon. Gentleman raises a number of important questions. On the savings that will come from the movement towards ACT, clearly there will be an element of financial support to the network, which will be announced as part of the comprehensive spending review. We are confident that, coupled with the new areas in which the post office network will be able to develop—we mentioned three in particular on the basis of the PIU report—if there is any shortfall in the sums coming into the network, it can be made up by the new activities into which the post offices will be able to enter.
The hon. Gentleman made the point that some 10,000 post offices will be covered by the commitment that we have given to maintain the rural network. We calculate that probably 2,000 more will come within the category of urban deprived. The other areas will benefit from the new developments to which I have referred. There will be greater commercial opportunities for those post offices. In total, the package that we have put forward today has something to offer all 18,500 post offices presently in the network.
The Post Office and the major banks are discussing the detail of the universal bank. The Treasury, on behalf of the Government, has said today that high street banks that participate in the universal bank and make financial contributions towards its establishment would meet their financial exclusion obligations. That will make a big contribution to ensuring that the universal bank is a success.
I have asked the Post Office to present, by 1 September this year, a business plan giving details of how the universal bank will work in practice. In terms of internet access, once again I have asked the Post Office to present a report to me by the end of this year.

Several hon. Members: rose—

Madam Speaker: Order. More than 40 hon. Members are seeking to catch my eye. I shall not be able to call anywhere near that number. I ask for brisk questions and answers from now on.

Mr. Martin O'Neill: I congratulate my right hon. Friend on the report. Some of us were worried when the Horizon project was substantially altered. Today's statement has dealt with most of our anxieties, and those who run post offices in rural and disadvantaged areas will have some hope. The package of support, the encouragement of diversification and the announcement about the universal bank are heartening.
I want to make a point about the record of Post Office Counters in negotiating with external bodies about franchised services. We all know about the loss of Powercard in the past couple of years, and the great disadvantages that that created for many of our constituents. I hope that my right hon. Friend, commercial freedom notwithstanding, will keep an eye on the rather macho approach that Post Office Counters sometimes takes in negotiations. I hope that we will not lose the opportunity of gaining access to important services through the Post Office because of the simplistic approach that Post Office Counters sometimes adopts.

Mr. Byers: My hon. Friend raises an important point. There is no doubt that, as we map out a programme of genuine change for the post office network, we need Post Office Counters managers who will be able to take advantage of the new opportunities. Some new management has already been put in place, and we are beginning to experience benefits from that.
The Powercard problem was a Scottish matter, but it shows the way in which mistakes can adversely affect post offices, communities and individuals. They should not be repeated in future. We will therefore ask the Post Office, with Post Office Counters, to prepare business plans and make detailed proposals so that the Government can ensure that we are discharging our responsibilities to the post office network and the communities that it serves. If we can move together in a genuine partnership, we shall be in a strong position to meet the challenges that lie ahead.

Mr. Peter Lilley: I am sorry that the Secretary of State chose to repeat a falsehood for which the Minister of State has already apologised to me.

Madam Speaker: Order. Perhaps the right hon. Gentleman will withdraw the word "falsehood" and select another word that is acceptable in parliamentary terms.

Mr. Lilley: I am sorry that the Secretary of State chose to repeat a statement for which the Minister of State has already apologised to me and the House. That statement conflicts with that made by his predecessor.
Let us now concentrate on the key issue. Will the Secretary of State tell the House whether sub-post offices will receive the same amount or less per transaction than they currently receive from the Post Office? Will the same number of transactions or fewer transactions be made? If sub-post offices receive the same revenues, from where will the savings come that the Secretary of State anticipates? If they receive less revenue, will not post office closures accelerate in future?

Mr. Byers: The right hon. Gentleman will know from experience the way in which the transaction costs are negotiated. He also knows that the Government are not


involved in the details of the transaction costs of those commercial negotiations. There is no reason for post offices and sub-postmasters to receive less than they currently receive in transaction costs. Nothing in today's statement will lead them to receive less. It is a matter of commercial negotiation.
The right hon. Gentleman asked whether the number of transactions will diminish. That depends on whether the Post Office can persuade people to choose to have their benefits or pensions paid in cash at post offices. The individual will have that choice; that is perfectly appropriate. The right hon. Gentleman knows that the current order book system has massive potential for fraud. We calculate that approximately £100 million a year will be saved by preventing fraud through the introduction of the universal bank system. I hope that the right hon. Gentleman will be prepared to support that saving.

Mr. Gerald Kaufman: I note that my right hon. Friend's statement today would have been impossible if the Tory Government's plan to privatise the Post Office had gone ahead and I also note that the welcome given to the statement by the hon. Member for Twickenham (Dr. Cable) contrasts starkly with the lies spread in Liberal Democrat "Focus" documents about the Government forcing pensioners to collect their pensions from banks.
Will my right hon. Friend accept from me, as a representative of an inner-city constituency, that my constituents will welcome the increased facilities that will be available to people on low incomes and benefits and will be grateful for the fact that the support structure in inner cities for local sub-post offices will continue?

Mr. Byers: My right hon. Friend makes an important point. The post offices in inner-city areas provide a valuable resource to many constituents who need the support that a local post office can offer. I am pleased that the announcement that we have been able to make today can both address the understandable concerns of the rural network and, at the same time, discharge our responsibility for those people who live in our cities and towns. The announcement is a balanced response to a good analysis of the state of the network, and will offer new opportunities and a totally new vision for the Post Office for the 21st century.

Mr. Archy Kirkwood: As an officer of the all-party group, the importance of the core income of sub-postmasters was drilled into me at the recent lobby. Does the Secretary of State accept that the Government are likely to save annually between £400 million and £600 million? That core income must be replaced, somehow, after 2005. Like my hon. Friend the Member for Twickenham (Dr. Cable), I am prepared to give the statement a qualified welcome, but I was anxious about the answer given to the right hon. Member for Hitchin and Harpenden (Mr. Lilley) in which the Secretary of State said that the issue was nothing to do with him but with the Post Office. Does not he accept that if he does not drive Government business in the direction of the sub-post office network, it will wither on the vine whether he likes it or not?

Mr. Byers: The core income that sub-postmasters receive has been in decline for several years because

people have voluntarily chosen to move to ACT. The announcement today will enable us to ensure a greater diversity, so that new sources of income will reach the post office network. The hon. Gentleman knows that it is not for the Secretary of State to negotiate the transaction costs, because that is a commercial matter. I do not negotiate the pay of those working for the CWU or the pay of sub-postmasters and mistresses, because that would be inappropriate. What we can do is to ensure that the post office network is attractive and that people will wish to visit it for their transactions. The statement I have made today will achieve that.
On the specific point of government business, I am able to announce today that whenever government services are to be provided, the Post Office will be entitled to tender for that work. That has not been the case in the past, but from now on the Post Office will automatically be on the list, and that will make a big contribution.

Mr. Martin Salter: My right hon. Friend's statement is welcome news for many of the communities left high and dry by the decision of Barclays bank earlier this year to close 172 branches on one day, leaving 84 towns and villages bankless. The statement has the potential to provide a financial lifeline to communities facing financial exclusion. The all-party group on community banking, which it is my privilege to chair, has long argued for creative solutions to financial exclusion, using the existing post office network. In what way will the new and welcome universal bank differ from the Girobank, which was privatised by the Tories? If the Tories ever get their hands on power again, what guarantees will we have that the universal bank will not suffer a similar fate?

Mr. Byers: My hon. Friend has been a great champion of providing financial services to many communities, and he has done valuable work on exposing the actions of some high street banks. He is also right to point out that the strategy adopted by many banks gives the Post Office a golden opportunity to provide financial services to many individuals who are now denied them as a result of that strategy. The role of the universal bank will be quite different from that of Girobank, which has now been linked with Alliance and Leicester. Essentially, the universal bank will be geared to the 3.5 million people who are unbanked. Those who do not want to use it as a banking facility can simply access their benefits or their pensions at their local post office, but those who want to use it for a wider range of financial services will be able to do so. It will be a matter of choice and we believe that that is the appropriate approach.

Mr. Oliver Letwin: The statement does indeed sound good, but the Secretary of State will be aware that sub-postmasters and others have come to realise that there is sometimes a difference between how Government statements sound and their real meaning. How much will it cost to install the new technology that will be required for the new services at sub-post offices? Who will pay those costs?

Mr. Byers: The hon. Gentleman is right to point out the importance of working closely with the National Federation of Sub-Postmasters, which is what we have been doing. That is why I hope that it will feel able to welcome the announcement this afternoon.
The hon. Gentleman asked about the costs of installing the new facilities. It will cost over £500 million to provide the modern online computer facilities that will be in every post office by the spring of next year. As he will know from last week's Post Office accounts, some of that money will come from the Post Office and some from the Government. In terms of the additional facilities over and above the online computer facilities, as I made clear in the statement and in reply to hon. Members, I am asking the Post Office to present me with a business plan for the universal bank by 1 September, and for the other proposals by the end of this calendar year, so that we can see exactly how much will be required to deliver those new opportunities to the post office network.

Dr. Gavin Strang: I congratulate my right hon. Friend on rising to the challenge of creating a financial environment in which we can have a thriving and prosperous network of post offices. Is he aware that my constituents will particularly welcome the fact that he recognises that post offices in some of the less affluent urban areas are even more vulnerable than those in rural areas on the move to automated credit transfer? Those same constituents will attach huge importance to the potential of the universal bank which he has announced today. While recognising that the small print and the details of the agreement with the commercial banks will be produced later, is my right hon. Friend satisfied that he will reach an agreement with the private banks that will enable the universal bank to achieve its full potential to sustain the network? For example, will an individual who already has an account with a private bank be able to open an account with the universal bank?

Mr. Byers: My right hon. Friend is right to say that there are many aspects of today's announcement will be of real benefit to his constituents and to many other people living in inner-city areas. Much of the work conducted by the performance and innovation unit revealed that many of the 3.5 million people who do not have a bank account felt that a bank account was not appropriate for them for two main reasons: first, they felt that they were talked down to and they felt uncomfortable about going into a bank; and secondly, they did not want to get into debt as a result of having an overdraft facility. The reason why they liked the idea of a universal bank was that they trusted the Post Office and felt comfortable with it. They felt that they could trust the way in which the Post Office dealt with their affairs. People who already have bank accounts will be perfectly entitled to join the universal bank and they will be offered the whole range of financial services that the banking sector provides. Once again, that will be a matter of choice, but I am confident that the universal bank will open up a new direction in terms of offering financial services to many people who are presently excluded from many of the benefits that most of us take for granted.

Mr. Dafydd Wigley: The Secretary of State said that there would be a new fund to help post offices in deprived urban areas. Will he confirm that there will be a mechanism to give the same help to post offices in deprived rural areas? Does the ring-fenced money to

which he referred apply equally to both urban and rural areas? Will he clarify conclusion 10 on page 89 of the report, which states that that ring-fenced fund will apply in England, but that similar arrangements in Scotland, Wales and Northern Ireland will be matters for the respective devolved Administrations? Will he confirm that any ring-fenced money will be additional for those areas, as it will be for England?

Mr. Byers: As to the position with regard to the devolved Administrations, I know that my right hon. Friend the Secretary of State for Wales is making an announcement this afternoon about how he intends to deal with these matters in Wales.
The ring-fenced funding has been negotiated in the context of the comprehensive spending review, and it will apply to Wales as well as England. The right hon. Member for Caernarfon (Mr. Wigley) is right to point out that targeted financial support must be supplied to deprived rural areas as well as to deprived urban areas, but that support will take different forms. The power to put subsidy into rural areas is contained in the new Postal Services Bill, but the fund for deprived urban areas is exclusively for those areas, and will be ring-fenced accordingly.

Dr. Lynne Jones: Proprietors of sub-post offices in my constituency are very worried about the declining value of their businesses. They tell me that they want not subsidy but proper recognition for the valuable service that they provide, much of which is on behalf of the Government. The measures announced today will go some way towards alleviating their concerns, but there is likely to be some delay in their implementation, and the report states that the universal bank concept needs more work.
In the meantime, business is being lost, and not only because people are choosing to move away from post offices. Sub-postmasters and mistresses in my constituency tell me that their customers say that staff at the Department of Social Security are misleading people into believing that their benefits must be paid into their bank accounts, even though they would prefer to have them paid at the post office.
I notice that the Minister of State with responsibility for pensions, my right hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), is present, and I hope that he will talk to colleagues about how the Department can encourage its clients to opt for the universal bank. I hope, too, that the Department will recognise that there are security advantages to allowing people to collect benefits from a post office rather than from any branch of their bank.

Mr. Byers: My hon. Friend was right to say that postmasters and postmistresses do not want a subsidy. They want to make their businesses commercially viable by moving into new areas and diversifying into new facilities. The announcement that we have been able to make today will go a long way towards assisting them.
Today's announcement will also introduce to the network a new confidence that has been lacking over recent years. We have been able to lift the cloud of uncertainty that has hung over the post office network. People can now plan ahead with confidence, as they will know the direction the Government intend to take with the network.
With regard to what my hon. Friend said about the Benefits Agency, we will make sure that benefit recipients and pensioners are made fully aware of the options and the genuine choice available to them. The big change on ACT does not begin until 2003, so there is a period in which we can make sure that the various initiatives are in place and functioning effectively. That is the challenge of the next few months, but I hope that today's statement will mean that many sub-postmasters and mistresses in my hon. Friend's constituency feel that they can plan ahead with confidence, in the knowledge that the network has a viable future.

Mr. Patrick McLoughlin: Since the House last debated post offices, I have been informed that the post office in Kirk Langley in my constituency is to close. Ten days ago, I was informed that the sub-postmistress at Brassington, who had her home converted to run the post office, has received a communication from the Post Office about reducing her wage substantially. What comfort will the Secretary of State's statement today bring to the proprietors of those two post offices?

Mr. Byers: If the Kirk Langley and Brassington post offices serve rural communities, they may well be covered by the proposals that I have introduced in connection with the protection and maintenance of the rural network. I cannot guarantee that, as I have not seen the details of the cases to which the hon. Gentleman refers, but people who read the statement will accept that there is much in it that will give reassurance to the rural network in the future.
The problems being experienced by Kirk Langley and Brassington have nothing to do with our proposals to move to ACT from 2003 onwards. They are already having difficulties. That is one of the reasons why we wanted to make the statement today—to instil some confidence in the system. I hope that in the future the

problems experienced in Kirk Langley and Brassington will be overcome, but I regret that it may be too late for those two particular post offices.

Mr. Alan W. Williams: I welcome the my right hon. Friend's statement, particularly the proposals for a universal bank for sub-postmasters and sub-postmistresses to carry out a Government general practitioner role. In that context, could they also have a role as welfare benefits advisers? Sub-postmasters are in touch with the poorer sections of the community. With regard to the elderly, sub-postmasters probably know more about care allowance, attendance allowance and the minimum income guarantee than, say, Thora Hird, and such a step could be very cost-effective. Could post office employees be paid to alert the Department of Social Security to benefit fraud?

Mr. Byers: When the role of a Government general practitioner is brought forward and we can see the detail, we will be looking at the areas mentioned by my hon. Friend with great interest. We will want to know to what extent sub-postmasters and postmistresses can be trained to give good quality advice about the welfare benefits system and a whole range of other issues. They are in an ideal position to act as the interface between the Government and individuals in many communities up and down the country. Post offices provide a network that can form the backbone of communication between the Government and citizens. They have not been used in that way in the past.
The report that we have today and the Government's response to it will ensure that the Post Office network can grow in the future and move in different directions, in a way that I believe will provide greater satisfaction to many sub-postmasters and postmistresses who want to develop a Government service role.

Several hon. Members: rose—

Madam Speaker: Order. We shall obviously be coming back to this subject. We must now move on.

Points of Order

Mr. Peter Lilley: On a point of order, Madam Speaker. First, I apologise for having used an improper word, but is there any precedent for a Secretary of State failing to apologise for repeating a statement for which his own deputy has previously apologised to the House?

Madam Speaker: I fear that that is barely a point of order for me. I can well understand that there are some problems and difficulties with exchanges across the Floor of the House from time to time, and 1 refer hon. Members, as I did yesterday, to the wise words of "Erskine May" about good temper and moderation in our language. I hope that Front Benchers will have heard what the right hon. Gentleman said, and will take his point to heart.

Mr. Humfrey Matins: On a point of order, Madam Speaker. I am not sure whether this is a point of order, but I hope that it is. The whole House will have heard the Secretary of State say in his statement that the importance of the Post Office cannot be underestimated. It is clear that the right hon. Gentleman must have meant "overestimated". He may want to correct that, because Hansard is bound to record what he said—namely, that its importance cannot be underestimated.

Madam Speaker: The hon. Gentleman is being very helpful to us all, as well as to Hansard.

House of Commons (Reserved Matters)

Mr. Frank Field: I beg to move,
That leave be given to bring in a Bill to prescribe which Members of the House of Commons may participate only in proceedings on reserved matters under the Scotland and Northern Ireland Acts 1998 or may be appointed only to a ministerial office having responsibility for such matters.
I also hope to overestimate the importance of this Bill. It is the next stage in the devolution path on which the Government have set forth. Early on in this Parliament, the Government enacted their key election manifesto pledges of devolving power to Scotland and Northern Ireland and, in a more limited respect, to Wales. Nobody who participated in that debate could believe that it was a one-off measure—that somehow we would be so clever, in a Parliament's early stages, to see through all the moves that would be necessary to ensure the success of such a programme. Indeed, those with more insight and wisdom than I prophesied as we began the debate that we were moving from a unitary to a federal state. The Bill that I seek leave to introduce today is another small, important step on that journey.
The Bill seeks the authority of the House to create two powers. The first is to make Members from Northern Ireland and Scotland unable to vote in this House on matters that have been devolved to their Parliaments. In a second respect, the Bill seeks to limit the power of Members for seats in Scotland and Northern Ireland to hold United Kingdom Ministries, where the relevant powers have been devolved to their regional Parliaments.
The Bill also has, as hon. Members would expect, a clear timetable. We were elected to this Parliament on a mandate to put through devolution without changing our own powers. The Bill does not seek to change those powers, but it sets out a timetable by which we might legislate in the next Parliament so that the legislation would become effective in the Parliament after that.
A major purpose of the Bill is to initiate a debate. Already, it is beginning to have some effect. So hon. Members will not be surprised if I address myself to what are called the main objections that have already arisen from some people who are concerned about the next stage of devolution: people whose nerve appears to be cracking in following the path on which we are safely set.
First, I am told quite correctly that when I was a Minister I did not vote against the devolution proposals. Some of the older Members here will know that, in government, the choice that one has is to be part of the payroll vote or to resign. I chose to resign on a different issue, but I hope that many of my colleagues on this side of the House appreciate the opportunity that they have now, as opposed to then, when we were compelled to vote on a three-line Whip. I am not sure what the Whips are planning for this afternoon, but in theory there will be a free vote. Hon. Members may thus be able to express their views more accurately than they did when we discussed the matter earlier in this Parliament.
Another objection is why I am raising this issue now. It is not an issue which is present in everyday politics. As Members of Parliament, we have a crucial duty both to attend to the immediate issues that affect our constituents and to consider those issues that are beginning to appear on the radar screen, and to try to deal with them so that


we do not sour the nature of our politics. Who would have thought that, already, the issue of fox hunting would be raised within the framework of whether Members of Parliament for Scottish seats, whose own Parliament will decide the issue for Scotland, should be able to vote in this House on fox hunting in England and Wales? The legal position is clear for all to see: Scottish Members have every legal right to vote when we come to consider fox hunting for England and Wales. Whether they would be wise to exercise that vote is another matter.
Another objection to the Bill is that it creates two tiers of Members of Parliament, but the clear fact is that we already have at least two tiers of Members. The Bill leaves the powers of this Parliament untouched. I suppose that our constituents will yawn slightly on hearing Members of Parliament say that the Bill creates two tiers of Members of Parliament. I hope that they will forgive us for being so egocentric. For they might say, not that we already have two tiers of Members of Parliament, but that we have created from the Act already on the statute book two tiers of voters. Between national Parliaments and the UK Parliament, we shall see increasingly what we see locally: people vote one way for their local council and a different way for their national MP. That will occur increasingly in voting patterns in Scotland and Northern Ireland and for this place.
The final argument that has been made shocks me. It is: "Why are you so foolish as to introduce this measure? May there not come a time when we will need the votes of Scottish Members to put through a programme affecting English Members that a Labour Government would not be able to carry without those Scottish Members?" The test is simple. Do we give our loyalty primarily to our party? All of us have some, or great, loyalty to our party. Or is our loyalty primarily to the democratic system that we have inherited and that we have a duty to hand on?
Devolution is a Labour issue. I am pleased to see so many Opposition Members in the Chamber, but when we were discussing devolution, they opposed every word, every clause, every line and every page of the legislation. As we know, there is great rejoicing in heaven over the sinner who repents. There is clearly a party breaking out up there at the repentance of the Opposition.
Before anyone tries to prevent us from continuing the debate on the Bill, may I issue one warning? The Tory wasps are beginning to swarm around our hive, which contains the devolution honey. Are we going to let the wasps have it, or shall we take the measure safely towards its logical conclusion? The logical conclusion is that we should debate it today and continue the debate thereafter.
At this stage, the aim of introducing the Bill is, of course, not to try to get it on the statute book; it is that we shall be able—in our own ways—to influence our parties and the programme that they propose for our re-election to the next Parliament. I emphasise that the Bill would not change the powers of Members in this Parliament; it will prevent a feeling of unfairness among voters in England and Wales who, as time goes on, will feel that, however great our devolution programme has been, it remains incomplete. Who better to complete that programme than those Labour Members who had the courage to initiate it?

Mr. David Curry: I beg to oppose the Bill. The proposal of the right hon. Member for Birkenhead (Mr. Field) is beguiling, even seductive. There is an implacable logic to his analysis.
The right hon. Gentleman is right to imply that, in their haste to head off, contain and discipline Scottish and Welsh nationalism, the Government have left unaddressed the question of the position of England. Given the existence of a Scottish Parliament, he is right that the position of Scottish MPs in the House is anomalous and, to some people, perhaps even provocative. He is right to accept that, just because a majority is, in general, tolerant and at ease with itself and its identity, its own rights should not be left unattended.
However, he is wrong in his prescription. He is wrong because his proposals would create two Parliaments within the one body—Parliaments with different majorities, different ambitions and competing and contested legitimacies. The proposal would create an English Parliament—a haphazard, accidental creation within the body of the UK Parliament.
There may be a case for an English Parliament, although I am not sure that I share the Arthurian reveries of some of the people who regularly gather to display the flag of St. George at the approach to this place. If there is to be an English Parliament, it must be a deliberately created one—apart and separate from this House; it must have an undisputed legitimacy so that this place is uncompromised as the forum for debating the British interest. The Parliament itself must be the creation of deliberate policy, not of procedural accident.
Create an English Parliament if you want one, Madam Speaker, and, if you like, put it in Winchester. Even better, put it in York. If you like, dare I say it, put it in Liverpool. But do not demean, denature and destroy this place by imposing on it an institutional schizophrenia. However much we pretend otherwise, we would also be creating an English Government—a sort of bastard Government not born in its own right.
Let us imagine a situation which the right hon. Gentleman has mentioned, where the withdrawal of Scottish MPs left a majority on English matters in the House different from that of the UK Government. One would then, necessarily, end up with a Government elected on a manifesto significant parts of which they could not deliver, and a competing Administration, unable to deliver their manifesto because they would not command the business of the House, and would therefore depend on the opportunistic hijacking of Government proposals.
The most persuasive claim made in support of our system of elections is that it delivers firm government. The proposal in the Bill to graft an English Parliament on to a UK Parliament with competing aims, programmes and majorities would spell incoherence at best and, literally, incompetence at worst. If we want an English Government, let us have a genuinely federal system, with four national Parliaments and Administrations, together with a UK-wide Parliament for non-devolved matters—not the disfigurement of this Parliament and the deliberate disabling of its Government.
I am English—according to my French wife, very English. I feel comfortable in my skin; I do not feel threatened, and although I might grumble about such


things as per capita spending in Scotland when compared with that in England, I do not feel abused by the differential. I do think that we should beware of the dangers of the aggressive assertion of the English interest expressed as a political mechanism.
We English are not a minority in these islands; we do not have an identity to prove or a history to rescue. When a federation exists in which there is a massive disequilibrium between the size and weight of one of its components and the others, there is a particular responsibility on the dominant partner to behave with restraint.
I do not believe that the Union is at risk from Scottish nationalism if that nationalism is left to sustain its own momentum and renew its own energy, if it can; but give it the adrenalin of an assertive English nationalism against which to identify itself, and I do fear that we shall be providing the weapon for an assault on the integrity of the Union.
The politicisation of English nationalism will risk making the disequilibrium at the heart of our federation of UK nations, which devolution, however clumsily and self-interestedly, has sought to address, unsustainable. We do need to reflect on the nature of the Anglo-Scottish relationship, about which, to be honest, I am not even remotely sentimental. We have already, through devolution, created structures that need to negotiate with one another to co-exist—resulting in the plethora of concordats that lie at the heart of the relationship between the different parts of the United Kingdom. If we exclude Scottish MPs from our deliberations on purely English affairs—assuming that those can be isolated and defined, which I doubt—we go one stage further in putting intergovernmental relations at the heart of British governance. We shall appropriate the idea that the UK is made up of foreign countries. Worse, we could let loose forces which, if ruthlessly exploited, could makes us strangers to ourselves.

Question put, pursuant to Standing Order No. 23 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—

The House divided: Ayes 131, Noes 190.

Division No. 242]
[4.39 pm


AYES


Ainsworth, Peter (E Surrey)
Clappison, James


Amess, David
Clark, Dr Michael (Rayleigh)


Arbuthnot, Rt Hon James
Clifton-Brown, Geoffrey


Baldry, Tony
Collins, Tim


Beggs, Roy
Cormack, Sir Patrick


Bercow, John
Cran, James


Beresford, Sir Paul
Dalyell, Tarn


Blunt, Crispin
Davies, Rt Hon Denzil (Uanelli)


Body, Sir Richard
Davies, Quentin (Grantham)


Boswell, Tim
Davis, Rt Hon David (Haltemprice)


Bottomley, Peter (Worthing W)
Day, Stephen


Brady, Graham
Donaldson, Jeffrey


Brazier, Julian
Dorrell, Rt Hon Stephen


Brooke, Rt Hon Peter
Duncan Smith, lain


Browning, Mrs Angela
Emery, Rt Hon Sir Peter


Bruce, Ian (S Dorset)
Evans, Nigel


Bums, Simon
Fabricant, Michael


Butterfill, John
Fallon, Michael


Chope, Christopher
Field, Rt Hon Frank





Forth, Rt Hon Eric
May, Mrs Theresa


Fraser, Christopher
Moss, Malcolm


Gale, Roger
Norman, Archie


Gamier, Edward
O'Brien, Stephen (Eddisbury)


Gibb, Nick
Ottaway, Richard


Gill, Christopher
Page, Richard


Godman, Dr Norman A
Paice, James


Gorman, Mrs Teresa
Paterson, Owen


Gray, James
Pickles, Eric


Green, Damian
Portillo, Rt Hon Michael


Greenway, John
Prior, David


Grieve, Dominic
Randall, John


Gummer, Rt Hon John
Robathan, Andrew


Hague, Rt Hon William
Robertson, Laurence


Hamilton, Rt Hon Sir Archie
Roe, Mrs Marion (Broxboume)


Hammond, Philip
Rowe, Andrew (Faversham)


Hawkins, Nick
Ruffley, David


Hayes, John
St Aubyn, Nick


Heald, Oliver
Sayeed, Jonathan


Heathcoat-Amory, Rt Hon David
Shepherd, Richard


Horam, John
Smyth, Rev Martin (Belfast S)


Howard, Rt Hon Michael
Soames, Nicholas


Howarth, Gerald (Aldershot)
Spicer, Sir Michael


Hunter, Andrew
Spring, Richard


Jack, Rt Hon Michael
Stanley, Rt Hon Sir John


Jenkin, Bernard
Steen, Anthony


Key, Robert
Swayne, Desmond


King, Rt Hon Tom (Bridgwater)
Syms, Robert


Kirkbride, Miss Julie
Taylor, Ian (EsherS Walton)


Lait, Mrs Jacqui
Taylor, John M (Solihull)


Lansley, Andrew
Taylor, Sir Teddy


Leigh, Edward
Thompson, William


Letwin, Oliver
Tredinnick, David


Lewis, Dr Julian (New Forest E)
Tyrie, Andrew


Lidington, David
Viggers, Peter


Lilley, Rt Hon Peter
Walter, Robert


Uoyd, Rt Hon Sir Peter (Fareham)
Whitney, Sir Raymond


Loughton, Tim
Whittingdale, John


Luff, Peter
Widdecombe, Rt Hon Miss Ann


Lyell, Rt Hon Sir Nicholas
Willetts, David


Mclntosh, Miss Anne
Williams, Rt Hon Alan


MacKay, Rt Hon Andrew
(Swansea W)


Maclean, Rt Hon David
Wilshire, David


McLoughlin, Patrick
Wright, Tony (Cannock)


Madel, Sir David
Young, Rt Hon Sir George


Malins, Humfrey



Maples, John
Tellers for the Ayes Mr. Peter Atkinson and Mr. Michael Connarty.


Marshall-Andrews, Robert



Maude, Rt Hon Francis





NOES


Abbott, Ms Diane
Butter, Mrs Christine


Adams, Mrs Irene (Paisley N)
Cable, Dr Vincent


Ainger, Nick
Campbell, Rt Hon Menzies


Alexander, Douglas
(NEFife)


Anderson, Donald (Swansea E)
Campbell, Ronnie (Blyth V)


Ashton, Joe
Campbell-Savours, Dale


Atkins, Charlotte
Casale, Roger


Austin, John
Chapman, Ben (Wirral S)


Baker, Norman
Chidgey, David


Banks, Tony
Church, Ms Judith


Barron, Kevin
Clark, Rt Hon Dr David (S Shields)


Beard, Nigel
Clark, Paul (Gillingham)


Begg, Miss Anne
Clarke, Eric (Midlothian)


Bell, Stuart (Middlesbrough)
Clarke, Rt Hon Tom (Coatbridge)


Bermingham, Gerald
Clarke, Tony (Northampton S)


Best, Harold
Coaker, Vemon


Blizzard, Bob
Cohen, Harry


Borrow, David
Cook, Frank (Stockton N)


Bradley, Peter (The Wrekin)
Corbett, Robin


Brand, Dr Peter
Corston, Jean


Breed, Colin
Cotter, Brian


Brown, Russell (Dumfries)
Cousins, Jim


Browne, Desmond
Crausby, David


Buck, Ms Karen
Cryer, John (Homchurch)


Burstow, Paul
Curry, Rt Hon David






Davey, Edward (Kingston)
Jones, Helen (Warrington N)


Davidson, Ian
Jones, Jon Owen (Cardiff C)


Dobson, Rt Hon Frank
Jones, Martyn (Clwyd S)


Donohoe, Brian H
Kaufman, Rt Hon Gerald


Eagle, Maria (L'pool Garston)
Keen, Ann (Brentford & Isleworth)


Edwards, Huw
Keetch, Paul


Ellman, Mrs Louise
Kemp, Fraser


Ennis, Jeff
Kennedy, Rt Hon Charles


Feam, Ronnie
(Ross Skye & Inverness W)


Fitzpatrick, Jim
Khabra, Piara S


Foster, Michael J (Worcester)
Kitfoyle, Peter


Gardiner, Barry
Kingham, Ms Tess


George, Andrew (St Ives)
Lammy, David


George, Bruce (Walsall S)
Lawrence, Mrs Jackie


Gerrard, Neil
Laxton, Bob


Gilroy, Mrs Linda
Lepper, David


Godsiff, Roger
Leslie, Christopher


Goggins, Paul
Levitt, Tom


Gordon, Mrs Eileen
Lewis, Ivan (Bury S)


Griffiths, Nigel (Edinburgh S)
Livsey, Richard


Grogan, John
Llwyd, Elfyn


Gunnell, John
Love, Andrew


Hall, Patrick (Bedford)
Macdonald, Calum


Heath, David (Somerton & Frome)
McFall, John


Henderson, Doug (Newcastle N)
Mclsaac, Shona


Hepburn, Stephen
Maclennan, Rt Hon Robert


Heppell, John
Mactaggart, Fiona


Hinchliffe, David
McWalter, Tony


Hood, Jimmy
Marek, Dr John


Hope, Phil
Marsden, Gordon (Blackpool S)


Hopkins, Kelvin
Marshall, David (Shettleston)


Hoyle, Lindsay
Martlew, Eric


Hughes, Simon (Southwark N)
Maxton, John


Hurst, Alan
Merron, Gillian


Illsley, Eric
Michael, Rt Hon Alun


Jackson, Ms Glenda (Hampstead)
Michie, Bill (Shefld Heeley)


Jackson, Helen (Hillsborough)
Mitchell, Austin


Jenkins, Brian
Moffatt, Laura


Jones, Rt Hon Barry (Alyn)
Moore, Michael





 Morgan, Ms Julie (Cardiff N)
Smith, Sir Robert (WAb'd'ns)


Mudie, George
Soley, Clive


Murphy, Jim (Eastwood)
Squire, Ms Rachel


Oaten, Mark
Steinberg, Gerry


O'Brien, Bill (Normanton)
Stevenson, George


Olner, Bill
Stewart, David (Inverness E)


Opik, Lembit
Stewart, Ian (Ecdes)


Pickthall, Colin
Stoate, Dr Howard


Pike, Peter L
Stunell, Andrew


Plaskitt, James
Tapsell, Sir Peter


Pollard, Kerry
Taylor, David (NW Leics)


Pound Stephen
Tay|or. Matthew (Truro)


Powell, Sir Raymond
Thomas, Gareth R (Harrow W)


Prentice, Ms Bridget (Lewisham E)
Tumer, Dr George (NW Norfolk)


Quinn Lawrie
Tumer, Neil (Wigan)


Raynsford, Nick
Twigg, Derek (Halton)


Reed, Andrew (Loughborough)
Tyler, Paul


Rendel, David
Tynan, Bill


Robinson, Geoffrey (Cov'try NW)
Watts, David


Ross, Ernie (Dunolee W)
Webb, Steve



White, Brian


Ruane, Chris
Whtehead, Dr Alan



Williams, Alan W (E Carmarthen)


Ruddock, Joan
Williams, Mrs Betty (Conwy)


Russell, Ms Christine (Chester)
Willis, Phil


Salter, Martin
Wilson, Brian


Savidge, Malcolm
Winnick, David


Sawford, Phil
Winterton, Ms Rosie (Doncaster C)


Sedgemore, Brian
wood, Mike


Sheerman, Barry
Woodward, Shaun


Shipley, Ms Debra
Wright, Anthony D (Gt Yarmouth)


Skinner, Dennis



Smith, Angela (Basildon)
Tellers for the Noes: Mrs. Eleanor Laing and Mr. Tom Brake.


Smith, Miss Geraldine



(Morecambe & Lunesdale)

Question accordingly negatived.

Orders of the Day — Limited Liability Partnerships Bill

[Lords]

As amended in the Standing Committee, considered.

New Clause 2

RETURNS TO REGISTRAR

'.—(1) Each limited liability partnership shall make an annual return to the registrar setting out—

(a) all claims made against the partnership for work performed by it;
(b) a statement by the relevant regulator that the partnership has complied with the relevant regulatory framework in its field of business; and
(c) the average rate of pay for the partnership's employees in the top and bottom quartiles (in terms of remuneration).

()(2) Any returns or reports made by limited liability partnerships to the registrar shall be made available for public inspection.'.—[Mr. Mitchell.]

Brought up, and read the First time.

Mr. Austin Mitchell: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Michael Lord): With this it will be convenient to discuss the following: New clause 4—Report of regulatory infractions and censures—
'.—Limited liability partnerships trading outside the United Kingdom shall report to the registrar all infractions of regulatory rules and all censures by regulators in other jurisdictions.'.
New clause 7—Disclosure of emoluments—
'.—Any limited liability partnership in which the amount of profit before member remuneration and profit share exceeds £200,000 shall publish details of director emoluments comparable in detail to those required of companies by Schedule 6 to the Companies Act 1985.'.
New clause 8—Statement of assets, etc.—
'.Each limited liability partnership shall, when filing annual accounts with the registrar, submit a statement showing—

(a) the value of the net assets of each partner; and
(b) whether any partner is at that time involved in litigation.'.

Amendment No. 19, in clause 6, page 3, line 35, at end insert—
'(2A) A statement of the scope of authority to act of each member shall be lodged with the registrar, displayed in all partnership offices and made available to clients.'.
Amendment No. 24, in clause 9, page 5, line 7, after "days", insert—
'giving full details of the address, financial and property interests and other trading activities of new designated members, and, in the case of those ceasing to be designated members, the reasons why they are leaving'.

Mr. Mitchell: Let me make it clear, as I did on Second Reading, that I do not like the Bill in any way. Essentially, it gives a dodgy, dirty deal to fat-cat accountancy practices, and that should not be the responsibility of the Labour party and a Labour Government. I find the speed with which the deal is being done even more reprehensible, when we are not making any special

concessions to trade unions or friends of the party. Indeed, many of our party's friends in local government, education and the union movement are being treated as the enemy within, while we are giving a dirty deal to accountancy houses.
The big accountancy houses have been pushing for this Bill, and have gone to extreme lengths to get it. The process was begun by the Conservative Government, and while it is perfectly right for a Labour Government to pursue that process, it is not right to introduce the Bill at this speed and this early in the legislative programme without countervailing concessions.
As a prelude to the long list of amendments that I shall move, I say to the House that I am resentful of the way in which my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) and I have been treated. We wanted to be on the Standing Committee, but we were not, and it would have been appropriate to have argued all this out in Committee rather than on the Floor of the House, when another, welcome Bill follows and we are under great pressure to shut up. I do not think that things should be done like that. The Hansard Society is to have a committee on the scrutiny of legislation, and I shall write a case study in which the Bill is an example of how not to scrutinise legislation. Instead of giving you my paranoia, Mr. Deputy Speaker, I shall deal with the new clause.
The general principle behind all the new clauses and amendments that I have tabled is consumer protection and ensuring that more information can be made available to the consumers of audit and insolvency services and all the other services that accountancy houses provide, because the Bill will protect accountants from the consequences of their own failure. If they carry out a bad audit—which often comes to light only when a firm fails—because they are so busy selling other services to the firm that they neglect or dilute the audit, they should be accountable in full for the consequences. If an insolvency is protracted, which does not serve the interests of the creditors because the insolvency practitioner owes no duty of care to them, they should also be accountable in full.
We are making a concession to the big accountancy houses without introducing any effective, independent regulation of accountancy and insolvency firms. We promised in our business manifesto that we would have full, independent regulation. We are not fulfilling that commitment; via so-called independent regulation, we are, classically, merely adding yet another layer to the existing chaos of regulation. There are eight regulators for 1,800 practitioners in insolvency. That is absolutely ludicrous, yet we are adding another layer above those eight. We are not providing independent regulation.

Mr. Michael Fabricant: I was listening to the hon. Gentleman's argument with great interest, but I left the Chamber briefly to find out how he voted on Second Reading. Of course he did not vote because there was no Division. I wonder whether he is against the principle of the Bill. I shall ask him a hypothetical question: if there had been a Division, would he have voted against the Bill?

Mr. Mitchell: Probably I would have voted against the Bill on Second Reading, but there was no Division.
How would I have pursued the Bill's aims? As I said in my introductory remarks, during which the hon. Gentleman left to find out information that was obvious


to everyone else, it was right to pursue the Bill's aims because the Conservative Government—our predecessors—had started to develop such legislation. I am a Fabian in such matters. Festina lente is the slogan.
Let us make progress with the Bill while introducing corresponding concessions to protect consumer interests and a corresponding framework of legislation to ensure that those accountancy firms that opt to become limited liability partnerships are accountable. That is the essence of my argument. Protection for consumers means providing a duty of care, which I shall attempt to do under later amendments, and reversing the Caparo judgment.
The basic principle behind all the amendments and new clauses that I have tabled, especially in this group, is that there should be maximum publication and recording of the available information because partnerships are inherently secretive organisations. There can be many variations of partnership and individual agreements.

Mr. John Burnett: What makes a partnership more secretive than a sole trader?

Mr. Mitchell: I am not comparing partnerships with sole traders. We are talking about bigger organisations than sole traders. The accountancy houses were allowed to set up as limited companies under the Companies Act 1989, but only one accountancy house did so. Why? First, there are tax disadvantages in becoming a limited company. Secondly, there are publicity disadvantages; they have to disclose more information. They do not want to disclose. They are secretive, powerful organisations.
I want more disclosure. I want more light; it is as simple as that. The consumer has a right to know. People who might be affected by the business or insolvency of limited liability partnerships have a right to know what their strengths and weaknesses are, so they should be subject to exactly the same disclosures as a public limited company, as was provided for in the Companies Act.
5 pm
Another consideration behind the amendments, particularly this group of amendments, is the need to avoid fraud and tax fiddles. It is possible for all kinds of dodgy organisations to register as limited liability partnerships. The words "dodgy organisations" bring to mind Yorkshire Water, now the Kelda Group. It is attempting to perpetrate what must be a deceit upon its shareholders: a process of so-called mutualisation to pass on assets that do not yield much profit to the shareholders. It will then offer itself as a management company to run the assets for a fee.
That must be a monstrous deceit of the consumer. One of my later amendments seeks to preclude it all together, saying that publicly regulated utilities should not have such a facility. I mention that in passing because the main problem is the use of those organisations to reduce the tax burden and to perpetrate fraud and tax fiddles. The transfer to limited liability status gives rise to that.
I am glad that the Minister, in his many answers to my many questions, communicated that fact. I have also written to the Chancellor of the Exchequer about the matter. Rightly, the tax regulation differences between partnerships and limited companies is now being reviewed. They should be aligned as closely as possible.

Why are we pushing for the legislation to be implemented before that review has been completed? People need to know what the tax benefits or disadvantages may be. In my view, there could be disadvantages—or there should be—in transferring, so I do not want the legislation to be implemented before the tax review has ended.

Mr. Fabricant: The hon. Gentleman is presenting a powerful argument as to why he opposes the principle of the Bill. I understand where he is coming from, but I am a little confused in one respect. He said in answer to my earlier question that, had there been a Division, he probably would have voted against Second Reading. He makes it clear that he is against the principle of the Bill. Why, then, did he not call for a Division on Second Reading, so that he could vote?

Mr. Deputy Speaker: Order. I urge the hon. Member for Great Grimsby (Mr. Mitchell) not to be seduced into a Second Reading debate.

Mr. Mitchell: Thank you for warning me, Mr. Deputy Speaker. I was not going to follow the hon. Member for Lichfield (Mr. Fabricant) down the path of his ignorance of parliamentary procedure and the role of amendments on Report—the stage of the Bill's proceedings in which I am participating.

Mr. Fabricant: On a point of order, Mr. Deputy Speaker. I wonder whether you could explain something to me and for the benefit of the House: am I not right that someone can call for a Division if he is a Member of the House?

Mr. Deputy Speaker: That has nothing to do with the matter that is before the House.

Mr. Mitchell: Thank you, Mr. Deputy Speaker. The hon. Member for Lichfield should not raise silly, querulous points during my speech. He would have done better to use his position on the Committee to raise some serious points there, instead of fighting to extend the vested interests and privileges of the big accountancy houses. That was the essence of what he was doing on the Standing Committee, which had only one Division, and in which Opposition Members promoted those vested interests. It is a little nitpicking, to say the least, of him to raise those points with me, having failed to fulfil his own responsibilities on the Standing Committee. However, I do not intend to follow that argument.
I was saying that the measure should not be implemented until the review of the tax status of partnerships and companies is completed; only then should it come into effect. I wish to raise many points and to warn off the hon. Member for Lichfield, who has interjected three times in an attempt to prolong my speech and who does not seem able to count, either. I point out that this argument is, in essence, about the consumer and about the soul of the Labour party and the Labour Government.
Conservative Members had their opportunity in Standing Committee and earlier to represent the views of the vested interests, and they did that very articulately. Indeed, Liberal Members, who are now engaged in hasty consultation at the last minute, also did that. It was a shame on Second Reading to hear the Liberal spokesman


speaking for professional vested interests when the only effective opposition in the House of Lords came from Liberal Democrats and particularly from Lord Phillips of Sudbury who appears on the Jimmy Young show.

Mr. Deputy Speaker: Order. The hon. Gentleman is again distracting the House from the new clause that he is supposed to be moving. Will he please address his remarks to new clause 2 and to the other new clauses and amendments that we are legitimately discussing?

Mr. Mitchell: I am grateful to you, Mr. Deputy Speaker, for bringing me back to the path of virtue.

Mr. Burnett: Will the hon. Gentleman give way?

Mr. Mitchell: I will not give way on this point, because I think I can anticipate the hon. Gentleman's objection. It will lead me down a path along which I do not want to go.
On new clause 2, Ministers said that limited liability partnerships would be treated as companies. In fact—and this is the purpose of the new clause—they have been treated more leniently. When a company prepares its accounts, it must indicate its contingent liabilities under accounting standard SS18, which accounts for contingencies. It is right that companies should do that, because anyone to whom a company owes money or supplies services will want to know its liabilities. To decide on the financial standing of a company, people need to know its contingent liabilities. That protects creditors and suppliers and it provides information to the public.
It is important to bring LLPs into line with companies, because partnerships have few assets. All the assets of a company are in its name, and creditors can try to get hold of them if it becomes insolvent. That is not so with a partnership, which tends to have few assets and the case has to be pursued against the negligent partner. I hope to come to the issue of how people will decide who is the negligent partner and how he will be designated, because such information should be available. However, creditors find that much less is up for grabs in a partnership than it is in a company. The two entities should be aligned with each other. Initially, we were told that they would be, but that has not occurred. New clause 2 would achieve that aim.
New clause 4 is about compliance with foreign rules. That is important. In the United States, the Securities and Exchange Commission—which is the most effective independent regulator in the world and the type of body that we should have in this country—is making a concerted attempt to force differentiation in the big accountancy houses between the audit arm and the service arm. If the audit arm sells services to its audit clients, that dilutes the effectiveness of the audit by making the firm more compliant to the wishes of the directors selling the services. That creates an undesirable vested interest if we are to have effective and independent audits. That shows the importance of complying with foreign rules. Such an attempt is being made in the United States, and it will come to fruition. Already, the SEC, which is not satisfied with professional self-regulation as it exists in the United States, has produced a scathing report on PricewaterhouseCoopers.
The interesting finding from the SEC inquiry was the amount of negligence that exists. In two years, there were 8,000 violations of basic principles of accountancy and audit, particularly partners and employees of PricewaterhouseCoopers holding shares in companies that were being audited by PricewaterhouseCoopers. Eight thousand violations! The report stated that there were
serious structural and cultural problems
in PricewaterhouseCoopers' compliance in these matters. In other words, the firm did not give a damn. It was negligent, there was a culture of laxness in the organisation, and it violated the rules of the industry. That report was an eye-opener to—

Mr. Deputy Speaker: Order. May I gently remind the hon. Gentleman that he has tabled new clause 3, which deals with the United States, the Securities and Exchange Commission and so on? I am happy for him to pursue his argument now, as long as he does not repeat it when he comes to new clause 3.

Mr. Mitchell: The matter is better dealt with now, Mr. Deputy Speaker. I shall mention it only briefly later.
That inquiry has extended to other firms, and there is a concerted attempt to prise the audit arms apart. We should be inquiring in the same way. In my view, the big accountancy houses are far too friendly with Government. I saw in The Observer on Sunday that since the election, PricewaterhouseCoopers, Ernst and Young, and Pannell Kerr Foster had all donated staff to the Treasury to draw up tax legislation. We do not have panels of criminals coming in to advise the Home Office on the criminal law or police methods, but in the case that I mentioned, the interested parties are being brought in to advise Government.

Mr. Stuart Bell: On a point of order, Mr. Deputy Speaker. Although my hon. Friend is perfectly right to put his case, is he entitled to say that the largest and most reputable accountancy firms in our country are criminals?

Mr. Mitchell: If my hon. Friend had listened—

Mr. Deputy Speaker: Order. The hon. Gentleman's remarks are not a matter for the Chair. They are a matter for the hon. Gentleman.

Mr. Mitchell: If my hon. Friend had listened, he would know that I said that we did not get criminals in to advise the Home Office, and that it was ill advised to get interested parties in to advise the Treasury on tax law. The analogy is there. I am aware of my hon. Friend's interest in those accountancy houses. The point is valid, because the question will always be asked whether we are soft-pedalling on the need to regulate those bodies because of the services provided to Government.

Mr. Stephen O'Brien: I have been listening with care to what the hon. Gentleman has been saying. It seems to be a rant against a particular firm, which does not necessarily do the House any credit. Would the hon. Gentleman be prepared to repeat what he has been saying outside the House, without the cloak of parliamentary privilege?

Mr. Mitchell: What a ridiculous question. If the hon. Gentleman had said that he had listened with interest,


I would have been overjoyed. If he is listening with a police notebook in his hand, the point is fatuous in the extreme. I have quoted the SEC's report on one particular company and the facts about the firms advising the Treasury. That is all that I have done. That is repeatable inside or outside the House. It is a matter of public record. I am sorry that we have to come down to such silly, nit-picking points in objection to the argument that large blocks of power need to be controlled and regulated, which is the responsibility of government.

Mr. Burnett: I understand what the hon. Gentleman is saying. Does he believe that the Government should impose on the Institute of Chartered Accountants in England and Wales more stringent rules with which it can govern the affairs of its members?

Mr. Mitchell: I do not believe in professional self-regulation. Chaps regulating chaps is almost a British myth. The Institute of Chartered Accountants in England and Wales is a puny body when compared with the enormous power of the big five accountancy houses, whose fees run into a total of £4.5 billion a year. These are enormous concentrations of power. A small professional body cannot effectively regulate them, and so-called independent regulation, which we are proposing, will not regulate them properly either.
I shall move on to new clause 7, despite the interruptions from vested interests on the Opposition Benches. The Bill introduces some highly desirable changes, but accountancy houses enjoy a state guaranteed monopoly on insolvency and auditing. It is therefore right to regulate. I am glad that my hon. Friend the Minister gave the commitment that legislation will include a requirement for financial disclosure equivalent to that which is required of companies. The new clause deals with the disclosure of emoluments. The Minister told us—it is in the Bill—that limited liability partnerships will provide information in the notes to accounts about the aggregate amounts withdrawn or applied on behalf of members during the financial year. There is also the requirement to disclose the earnings of the highest paid member in cases where profit exceeds £200,000.
The figure of £200,000 comes from schedule 6 to the Companies Act 1985. That Act requires that information that is published should include emoluments, gains made by directors on the sale of share options and amounts paid to directors under long-tern incentive schemes. I hope that the Minister will tell us that the same categories will be covered in the requirements on limited liability partnerships, and that his estimate of £200,000 is based on the categories to which I have referred. Will LLPs be required to publish these details?
We all know that there is considerable disquiet about fat cats. The public need to know how much they are being paid. It is possible for limited liability partnerships to own limited companies. We would therefore have the ludicrous situation in which the limited company would have greater obligations to disclosure than the LLP parent of that company, which is exempt from much of that disclosure. That seems to be wrong.
I know that Opposition Members are not keen on disclosure of public information, but it is the public's right to know, especially when incomes have been accrued in pursuance of a publicly granted state-conferred monopoly in audit and insolvency.
New clause 8 is about more disclosure of the assets of each partner. Concessions are conferred on accountancy and other firms that are trading as LLPs. In the event of insolvency, the creditors can call on the assets of an LLP, which as I have said will not be substantial. It is more the assets of the negligent partner that are important. I return to the point which I broached earlier, which is how the public know which partner is responsible for the negligence. Who is the negligent partner against whom actions must be pursued? Knowledge of that might dissuade some clients from having dealings with that partner.
Customers should have access to that information. If existing claims against a partner are such that a further claim would take all his assets, the public need to know. How will they learn who is the negligent partner and whether other allegations of negligence have been made against individual partners of a limited liability partnership? People need to know who they are dealing with and what their status is.
We are talking about public provision of information to safeguard creditors, including information about individual partners' assets, against which claims can be made. We are limiting liability, so we need to know what the assets are. In the case of a company, shareholders' liability is limited to the extent of the paid-up shares, and the balance sheet lists the assets and liabilities for anyone to see; but the balance sheets published by LLPs will not give the creditors full and fair information. All I want is parity between the information published by LLPs and by limited companies. That seems fair.
Amendment No. 19 deals with registration and is designed to let us know what authority each member has to act.
Amendment No. 24 is again a matter of necessary public information for creditors and potential creditors about the financial standing of the LLP.
I hope that my hon. Friend the Minister will respond to some of my points and clarify whether my arguments are valid.

Mr. Fabricant: The hon. Member for Great Grimsby (Mr. Mitchell) delivered quite a rant and proved his inability to count: I intervened twice, not three times. Some of his arguments, if not persuasive, raise interesting questions that the Minister should address.
It is a good idea in principle for the liability of large partnerships to be limited. In this modern age, partnerships can comprise 50, 100 or even 200 or 300 people—and in some instances, several thousand—and it is not practical to expect them all to have joint and several liability, but I tend to agree with the hon. Gentleman that, if the state is providing some protection, it should demand a quid pro quo and expect certain information from the partnership.
I do not go as far as the hon. Gentleman. Judging from their faces, not many Government Members would go that far. It is interesting to note the divisions on the Government side. The Government feel—and I agree with them—that there should be some protection in the form of limited liability, possibly echoing some of the protections that are available to companies under the Companies Acts. Should not limited liability partnerships also have to meet some of the obligations of disclosure in annual returns that are imposed on companies under the


Companies Acts? I would welcome an unemotional and non-ranting answer to that question—the Minister is known for his unemotional and accurate responses.

Mr. Jim Cousins: I share much of the frustration and irritation expressed by my hon. Friend the Member for Great Grimsby (Mr. Mitchell) at the circumstances in which we find ourselves. Apparently, the Bill is technical and rather obscure—of interest only to a few people who have a particular interest in some obscure points of law and commercial practice. Yet it advances an important innovation in British commercial law, which could well be taken up by many presently unlimited liability partnerships.
The hon. Member for Lichfield (Mr. Fabricant) said that the Bill was targeted at the needs of large partnerships. He and the Government must recognise that a number of partnerships that are not large may seek the protection and advantage of limitation of liability. That ought to give the House cause for a little caution.
We find ourselves discussing this quite complex Bill, which advances an important new principle, between the excitement of a statement on the Post Office, which is important, and the even greater excitement of debate on the Fur Farming (Prohibition) Bill. That is not the ideal circumstance in which to be discussing such a matter. It inevitably imposes a good deal of pressure—I do not suggest in any way that it is external pressure—on those taking part in the debate.

Mr. Fabricant: Of course the hon. Gentleman is right that small as well as large partnerships may seek the protection that the Bill will offer when enacted. However, given that there is similar legislation in other parts of the world, does he fear that jobs might be lost if larger partnerships centred outside the United Kingdom, in countries that offer partners protection?

Mr. Cousins: Of course I shall come to that point, although I hope not to be tempted too wide of the new clauses and amendments.
The hon. Gentleman asked my hon. Friend the Member for Great Grimsby whether, in principle, he accepted the idea of limitation of liability in partnerships. Were I to be asked that question, my answer would be yes; I have no difficulty with the limitation of liability in partnerships.
The Partnership Act 1890 has always been considered one of the most ideal pieces of legislation. It has endured for more than a century without any tampering with or amending of its essential form or principles. It has stood the test of time; it has the clear concept of joint and several liability.
However, the Act was framed when all partnerships were extremely small, the people were individually known to each other, and the reputation, efficiency and performance of the partners could be measured and tested by potential and actual partners. Any problems could be addressed immediately, simply and directly. We have moved on: we now have partnerships that consist not merely of thousands of partners but sometimes of tens of thousands of partners, in which such disciplines cannot apply.
5.30 pm
It may be right to offer the protection of limited liability to such partnerships, but—this point has already been discussed—the limitation of liability being offered here is not confined to such circumstances. Small partnerships can also take advantage of it. Therefore, we are considerably modifying the structure of the principle advanced in the 1890 legislation, and we should be properly cautious about that.
I am prepared to consider the principle of limitation of liability in partnerships, but we must consider whether this is the right moment to introduce such legislation. We still have the unfinished business of the Caparo judgment, to which my hon. Friend the Member for Great Grimsby rightly drew attention. Auditors appear to owe no significant legally meaningful duty of care to the shareholders in the enterprises that they serve.
Accountancy was done no favours by the Caparo judgment. It opened a hole in accountability and responsibility, which we are still puzzling how properly to fill. The present proposal to create an independent regulator for accountancy, but not a statutory one, in a way seeks to undo the damage that was done in the Caparo judgment.
One of my anxieties about the Bill is that until we can see the real strength of the framework being offered under independent regulation—the proposals that are now being worked up in front of us in the area of accountancy—it is difficult to know whether the Bill is appropriate and soundly formed. There must be a legitimate anxiety about that.
Furthermore, there have been a number of legal actions. Out of respect to my hon. Friend the Member for Middlesbrough (Mr. Bell), I shall not start a cascade of prominent names and cause him some agitation lest important people in our commercial world be denounced. However, my hon. Friend must recognise that those people are suing each other. Such matters may all be settled out of court. One would not attempt to speculate about that, but it is entirely possible. However, if matters do come to court, the rehearsal of the evidence will provide some important information which can guide us in legislatures and help us deal with some of the issues that arise in partnerships if we begin to limit liability.

Mr. Stephen O'Brien: I do not dispute what the hon. Gentleman says about accountants suing each other, but to put it in perspective, much of what is happening is probably driven by the insurance cover that those partnerships have, whereby they are required to pursue their interests. The insurers drive them to that. Part of the point of the Bill is that limited liability partnerships will, to some degree, obviate the need for that depth of insurance and the expense of it, which is ultimately passed on to clients and consumers.

Mr. Cousins: That raises more issues than it tidies up. It may be true that insurance is one of the drivers behind large accountancy firms suing each other over responsibility for the disappearance of what, it must be recognised, are hugely significant sums of money. The loss of that money has damaged thousands of individuals, voluntary organisations—in the case of BCCI, a large number of voluntary organisations—and enterprises. We are not talking about something that is of no significance; it is of profound significance.
The hon. Gentleman says that partnership firms are suing each other because of the insurance driver, and that such legal actions would not otherwise take place. That worries me. What are we doing in this legislation, offering an alternative source of cover to insurance cover that can now be purchased perfectly properly, and which is the basis of those legal actions? What will this legislation cause to be hidden that would otherwise be exposed?

Mr. Fabricant: I am following the hon. Gentleman's argument with considerable interest, but surely there is nothing in the Bill that prevents any client of an organisation that is perceived not to have acted properly from suing the limited liability partnership?

Mr. Cousins: I have already referred to the great difficulty there. The pressure for the legislation began in the accountancy partnerships, and although I entirely accept that far more than accountancy partnerships may seek to take advantage of it, in the accountancy world we come up against the great problems that my hon. Friend the Member for Great Grimsby and I have mentioned—the Caparo judgment and its rather unfortunate inheritance.
Against the background of the Caparo judgment, any legal action against an accountancy partnership faces the difficulty of having to overcome the consequences of that legal decision. That point does not apply to other kinds of partnership that might seek to take account of the legislation. I fully acknowledge that. However, the House knows that the driving influence in the introduction of the legislation came from those accountancy firms. That is a relevant point.

Mr. Burnett: rose—

Mr. Cousins: I do not want to take up too much time. I know that there is a custom whereby people who want to talk at length always say that they do not want to detain the House, but on this occasion I really do not want to detain the House, so I shall be careful about taking interventions.
The hon. Member for Lichfield (Mr. Fabricant) drew attention to the fact that there are legal jurisdictions close to Britain—the one that is always mentioned is Jersey—in which limited liability has already been carried into law. The Conservative Government's motive for wanting legislation in this form was the fear that people would relocate to such regimes to take advantage of limited liability.
All that has been overtaken by other events, in particular concerns about offshore legal and tax regimes, which provide unfair competitive advantage. That is a difficult and complex issue, into which I do not wish to stray this afternoon, but all will recognise that the Government have offered leadership to Europe in striking a deal on the withholding tax only a fortnight ago, and setting up a regime based on the exchange of information, which is a real, genuine and significant breakthrough in tackling such offshore regimes. Therefore, it might again be wise to see how all that develops before we advance as an argument for this legislation the fact that there may be competitive, more attractive jurisdictions elsewhere in which people might seek to locate. That is an argument for a little caution and delay.
All the new clauses concern disclosure and the importance of making information available, which will allow outsiders to form proper judgments about the good conduct and good management of any regime which has the advantage of limited liability.
New clauses 2 and 8 advance the principle of openness in the specific context of financial information. The creation of limited liability partnership regimes gives rise to a potential tax problem. The Government acknowledge that in their correct intention to remove both the possibility of improper tax avoidance and the use of a variety of legal vehicles to take advantage of tax planning possibilities and thus improperly avoid taxation. I expected an intervention at that point, but no one wishes to intervene, so I shall move on.
We are considering an important point. It would be extremely helpful if my hon. Friend the Minister could clarify the Government's discussions about the tax regime that accompanies the Bill, and the way in which that regime will work. The House would then be well informed.
New clause 7 attempts to deal with one of the issues that features in the Government's agenda for company law reform. Sadly, we shall not legislate on that agenda until after the next general election. Again, there is a question of timing. I know that my hon. Friend the Minister intends the full force of current company legislation to be exercised over limited liability partnerships. We cannot speculate on any future changes—the House is not the right forum or platform for indulging in such speculation—but we are all considering the matter, and it would be helpful if my hon. Friend could tell us that the Government intended to reflect future changes in company law in the liabilities for disclosure affecting limited liability partnerships.
As my hon. Friend the Member for Great Grimsby rightly said, new clause 4 attempts to deal with what goes on in other jurisdictional regimes. My hon. Friend rightly mentioned the work of the Securities and Exchange Commission in the United States, and its attempts to provide for a proper relationship between general accountancy work and the specific work of audit. It ensures that those two functions are not confused, and that no market abuse occurs when people use their economic power in one context to achieve economic advantages by sweeping up all the audit work. The Securities and Exchange Commission properly tries to deal with fair competition and market abuse.
There is no point in Opposition Members saying that the Securities and Exchange Commission will not affect us here; it has already affected us. We are considering global partnerships that engage in economic activities all over the world, which are caught by the actions of the Securities and Exchange Commission. It is fair to ask how we will tackle those issues. It would be unfortunate to be led down a road of competing jurisdictional regimes with barriers between them, and all sorts of intergovernmental disputes over the propriety of one action by a regulator in one country when compared with the different framework of rules in another country. We must try to avoid that.
5.45 pm
The Government have referred a general bundle of issues to the Office of Fair Trading. It has been asked to consider the way in which professional partnerships work,


and the way in which demonstrable problems will be tackled. It would not be proper for my hon. Friend the Minister to direct the OFT's work; it would be wrong, and I do not ask him to do that. However, it would be proper for him at least to direct the OFT's attention to the matter so that it could perhaps ascertain methods of avoiding the possibility of conflict between jurisdictions, and of attempting to introduce in our regimes governing market abuse and fair competition some of the benefits that the Securities and Exchange Commission brings to regimes in the United States.
I have mentioned important underlying issues, which all give grounds for caution; they are reflected in the new clauses. I accept that Back-Bench amendments are not always framed well. However, I have outlined the purpose of new clauses 2, 8, 7 and 4. I hope that I have explained the reasons for them, and that my hon. Friend the Minister will be able to assist us in dealing with them.

Mr. Burnett: I declare at the outset that I am a solicitor and that I no longer practise. I used to specialise in taxation and, to some extent, partnership matters.
Any trade or profession can become a limited liability partnership provided that at least two persons—that includes companies—come together to form one. As has been said, the usual rules for joint and several liability are not applicable to limited liability partnerships. Nevertheless, it is worth putting it on record that an individual member of an LLP is liable in tort for his or her actions, if they are negligent or held to be negligent. The firm and all its assets are fully liable.
Disclosure should be at the heart of the Bill. I refer the House to my words on 23 May 2000 on Second Reading. I said:
Finally, a fundamental principle of the Bill should be that the price for the limitation of liability is full disclosure of the financial affairs of a business and that such information should be readily available to the public.—[Official Report, 23 May 2000; Vol. 350, c. 907.]
I have not changed my mind. It would be in the interests of those who did not serve on the Committee, or who have not studied the matter as deeply as others, and for the convenience of the House, if the Minister set out clearly the disclosure obligations in the Bill.

The Parliamentary Under-Secretary of State for Trade and Industry (Dr. Kim Howells): I am well aware of the concern of my hon. Friends the Members for Great Grimsby (Mr. Mitchell) and for Newcastle upon Tyne, Central (Mr. Cousins) about accountancy and its regulation in this country. They have made it clear that they believe that limited liability partnerships are a concession to the professions, especially the accountancy profession.
By tabling the new clauses, my hon. Friends are trying to use the Bill as a means of regulating the accountancy profession. As I said on Second Reading, I admire their tenacity and their concern for the reform of accountancy regulation. However, it is not the Bill's function to regulate professional activity. When regulation is believed to be necessary, the activity, not the LLP as an entity, will be regulated.
Time and deliberation were mentioned on several occasions. This Government and the previous Government have consulted on the detail of the Bill for at least four years. A long and intensive debate has therefore taken place about the proposals.
On the issue raised by my hon. Friend the Member for Newcastle upon Tyne, Central about the investigation of the professions by the Office of Fair Trading, I share the views of my hon. Friends that the issue of auditor independence—in particular, the extent to which an audit firm should be able to provide a non-audited service to audit clients—is important. That applies not only in the US, where the SEC has made proposals to deal with the issue, but in this country.
The OFT is conducting a review of the professions that will focus on, among others, accountants and solicitors. I am sure that the review will address the balance between competition and regulation in relation to the accountancy profession. That work provides an excellent opportunity to examine the concerns that my hon. Friends have raised about the ability of auditors to provide non-audit services. The comments of my hon. Friend the Member for Newcastle upon Tyne, Central encourage me to ensure that those conducting the review are fully aware of those concerns, and I undertake to do so.
It has always been the intention that an LLP will have applied to it, through secondary legislation, requirements similar to those that are applied to a company. The amendments, if they were accepted, would add a heavy additional burden to LLPs in comparison with those of a company. I am strongly of the opinion that that is not the right approach.
New clause 2 would add a substantial extra burden on an LLP in comparison to a company, and it would be manifestly unfair to require such extra requirements on an LLP. There are no Companies Act requirements for a company to set out any claims made against it for work done, nor does it need to have a statement from its regulator stating that it has complied with the relevant regulatory framework. In addition, I do not see what would be gained by giving details of employee pay, which should be a matter between the employee and the LLP.
Under section 709 of the Companies Act 1985, any person may inspect the records kept by the registrar, and that section will be applied to LLPs. New clause 4 would impose a burden on LLPs trading outside the UK that goes beyond the requirements imposed upon a company or a partnership. It is not the role of the registrar of companies to list infractions of regulatory rules, either in the UK or in other jurisdictions. It is a matter of policy for the regulatory body concerned to decide whether infractions should be reported. I shall try to return to that issue, because my hon. Friends raised some interesting points.
New clause 7 would require an LLP to publish details similar to the details of director emoluments that are required by schedule 6 of the Companies Act 1985. That issue was addressed by the Trade and Industry Committee, which agreed that there was no reason why the Department should revisit the issue of the disclosure of the highest paid members' drawings. I do not believe that making available any further details of members' drawings would add anything. All LLPs will need to provide information on the aggregate amounts withdrawn or applied on behalf of members during the financial year


in the notes to the balance sheet. That is in addition to the requirement to disclose the earnings of the highest paid member in firms where profit—before member remuneration and profit shares—exceeds £200,000. The disclosure of that information will allow potential creditors to take a view on how the LLP is being managed and whether members are making excessive withdrawals.
New clause 8 would require the annual accounts of the LLP to include a statement that would show the value of the assets of each partner and whether that partner was involved in any litigation. I share my hon. Friends' aspirations for greater transparency and this central issue is being examined by the independent company law review, which will make—I trust—some insightful and radical proposals.
As an LLP is a separate legal entity, we envisage that third parties will contract with the LLP rather than the member. For that reason, it is important that potential clients of the LLP are aware of the assets of the LLP and it is why we have applied the financial disclosure requirements for companies to LLPs. I do not believe that the disclosure of the net assets of members will add to creditor protection. Nor do I believe that providing information on whether a member is involved in litigation is right, because providing such information could be detrimental both to the individual and the LLP. The member should be seen as an individual separate from the LLP. I strongly believe that the new clause would be unfair and would go against our stated policy of having comparable treatment for LLPs and companies.
I see no reason why a statement of the authority to act of each member needs to be lodged with the registrar of companies and to be made available to clients, as suggested in amendment No. 19. It goes beyond what is required of directors of a company or of partners in a partnership. The Bill states in clause 6 that every member of the LLP is an agent of the LLP. A potential client will be able to find out who the members and designated members are, and details of the financial background of the LLP and any charges on the LLP will be available from Companies House. I am happy to inform my hon. Friends that we require designated members to give details of their addresses when they are appointed as designated members. That follows the requirements for the appointment of directors.
On the question of taxation, which my hon. Friends raised, I said on Second Reading that even though we believe that it is right to tax LLPs as partnerships, we are aware that, in some cases, the primary or only attraction of LLP status might be the tax treatment. As a result, we are considering the issue carefully with the Inland Revenue. Depending on our conclusions, legislation may be brought forward in the Finance Bill in 2001. We would, however, consult widely before legislating.
I emphasised that our intention was not to undermine the commercial certainty of the taxation treatment of LLPs for those businesses for which LLP status was intended, and I recognise that that might happen. I know that my hon. Friends are concerned about that point—both about the possible deterrent factor it might have, and about the uncertainties that would exist for those who take the plunge to become LLPs. I share the concerns that they have raised about companies that wish to become LLPs and about the need for greater clarity about the taxation

implications of such a transformation. Indeed, the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) raised similar points in Committee.
I am of the view, therefore, that it is appropriate to await the outcome of the review before commencing the LLP legislation, so that anyone wishing to become an LLP may be certain of what tax treatment it can expect. I do not expect that, in practice, that will cause delay, because our expectation was that LLPs would not be available before early 2001. Clearly, were there to be legislation in next year's Finance Bill, we would need in any case to be certain of our intentions by that stage.
My hon. Friend the Member for Great Grimsby raised concerns about the prospect of water companies using LLPs as a means of running not-for-profit mutualised companies. That is a novel idea that has suddenly emerged on the scene since several water companies decided that they cannot make profits out of supplying water. My hon. Friend expressed concern about the intention of the owners of one particular company—Yorkshire Water—to split it in two and sell its physical assets to a non-profit-making mutual company. In that context, a statutory undertaking under the Water Industry Act 1991 must be a company limited by shares and could not be a limited liability partnership. It is perhaps also worth noting that anyone wishing to become an LLP must be carrying on a lawful business with a view to making profit. An LLP is therefore not available as an option for non-profit-making organisations.
6 pm
The hon. Members for Lichfield (Mr. Fabricant) and for Torridge and West Devon (Mr. Burnett) raised the general question of disclosure, and my hon. Friends the Members for Newcastle upon Tyne, Central and for Great Grimsby made a number of valuable and interesting proposals in respect of disclosure requirements for limited liability partnerships. It is, however, difficult to accept those proposals simply in relation to LLPs without considering corresponding application to companies.
It is our aim, as far as is possible, to keep the disclosure requirements for LLPs in line with those for companies and—I hope that this addresses the point raised by my hon. Friend the Member for Newcastle upon Tyne, Central—to ensure that changes in circumstances and what those changes might generate in terms of demands for disclosure are allowed for within the remit and the report of the independent company law review.
As I said earlier, the provision of information by companies is one of the key themes of the company law review that the Government set up two years ago. The review has already published proposals which would change quite radically some of the disclosure requirements. This therefore provides the best opportunity for many years for my hon. Friends' ideas to be considered.
It is our intention that changes which are made to companies following the company law review should then be applied to LLPs to the maximum extent possible. Given those reassurances, I very much hope that my hon. Friends will withdraw their amendments.

Mr. Mitchell: I am grateful to my hon. Friend the Minister and I shall try to save what is left of my career by gibbering that gratitude to him for a little while. He has


given us some substantial assurances. First, I particularly like the assurance that the Kelda Group—formerly Yorkshire Water—will not be able to get away with what I thought was a possible subterfuge by registering as an LLP. I am grateful for that assurance, although it was not made in relation to this group of amendments.
Secondly, I am grateful for my hon. Friend's substantial assurance that the Bill will not come into effect until the tax review is completed. That is important as it will enable people thinking of setting limited liability partnerships to know from the recommendations of that review what the tax regime will be. That is a substantial advance in our argument.
My hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) and I have been entertaining the House with our nice guy, nasty guy double act—

Mr. Cousins: On a point of order, Mr. Deputy Speaker. I think that my hon. Friend meant to imply that I was the nice guy.

Mr. Deputy Speaker: That is not a matter for the Chair.

Mr. Mitchell: Of course my hon. Friend is the nice guy.
Thirdly, my hon. Friend the Minister's assurances on disclosure and bringing partnership law and safeguards into line with those that apply to limited companies through the company law review has given us the incentive to make submissions along the lines of the arguments that we have put before the House. We shall consider doing that in respect of both sets of provisions. That is another substantial point.
Fourthly, my hon. Friend assured us that the Office of Fair Trading review will be looking at these matters and I am sure that it will take into account fair competition considerations in respect of the sale of other services.
We are grateful to my hon. Friend the Minister for those substantial advances and we feel that we have achieved something in very difficult circumstances. Although Opposition Members tried to heckle us—in particular, they tried to heckle me rather than my statesmanlike hon. Friend—we were only doing the job of scrutiny that the Opposition singularly failed to do. Instead, they simply pressed for further concessions for the vested interests.
We have been doing a job of scrutiny under a handicap. As the Bill originated in the House of Lords, it will not be returning there for further amendment. I am grateful for the four substantial concessions that my hon. Friend has given us and I realise they are all that we shall get at this stage. I do not think that it should have been done in this way, but as it has we are grateful to my hon. Friend for the concessions that he has made. As I am a realist, I shall withdraw the motion and give notice that my hon. Friend and I shall not be moving any of the other amendments in our names. I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

Mr. Deputy Speaker: As the hon. Member for Great Grimsby has said that he does not intend to move his later amendments, we now move on to amendment No. 1, in the name of the official Opposition.

Clause 5

RELATIONSHIP OF MEMBERS ETC.

Mr. Nick Gibb: I beg to move amendment No. 1, in page 3, leave out lines 22 and 23 and insert—
(b) subject to paragraph (a), by the rules and principles which would apply if the law relating to partnerships applied to them.'.
Neither of these are relevant interests, but I remind the House that I am a chartered accountant, so I ask hon. Members to go easy on the language that they use against chartered accountants and others. Also, I do not currently practice, but I contribute six or seven articles a year to Accountancy Age.
Having sat through the debate on the new clauses tabled by the hon. Members for Great Grimsby (Mr. Mitchell) and for Newcastle upon Tyne, Central (Mr. Cousins), I feel as though I am intruding on private grief. If the Labour party can tear itself apart on a relatively technical measure like this one, one can only wonder what machinations, discussions and divisions are taking place behind the scenes on issues of wider concern, such as Labour's failure to deliver on the national health service, education and crime.

Mr. Cousins: I assure the hon. Gentleman that we have had a most comradely exchange with the most comradely outcome. I should like to put that on record.

Mr. Gibb: I am grateful to the hon. Gentleman for that intervention. I am sure that it was comradely, but none the less Labour Members were split.
This is an important Bill which has had several layers of scrutiny. As the Minister said, it began life under the Conservative Government, but when it eventually began its passage through the other place, despite scrutiny and a report by the Select Committee on Trade and Industry, it still contained a number of problems.
The hon. Member for Great Grimsby was wrong to say that the Opposition did not give the Bill considerable scrutiny. My noble Friend Baroness Buscombe and I discussed our concerns in great detail with the Minister, Lord McIntosh, and owing to pressure in the other place by my noble Friend and a reasonable approach taken by the Minister, many of our concerns were dealt with by Government amendments. Indeed, had the Government taken such an approach on some of their more controversial legislation, they would not be in their current position in regard to credibility with the public.
There are nevertheless some remaining concerns which we raised in Committee and which the Government have not dealt with adequately. Our first concern is that of the so-called default provisions. Clause 1(5) of the Bill states: except as far as otherwise provided by this Act or any other
enactment, the law relating to partnership does not apply to a limited liability partnership.
The reason for that provision is, according to the Government, that as an LLP is a legal person in its own right and is therefore a body corporate; in general,


partnership law should not apply; and company law should apply instead. However, the very essence of an LLP remains that of a partnership.
It was in order to retain the partnership ethos that professional firms have sought this form of incorporation rather than becoming companies proper. An LLP will still have what is in effect a partnership agreement regulating all the internal relations of a partnership; but particularly for smaller, less well advised partnerships which seek to become LLPs, it could well be that the internal partnership agreement will not have clauses that deal with every eventuality to be faced by a partnership in business.
In the past, this would not have mattered. The Partnership Act 1890—and the century of case law since—have filled in the gaps regarding almost every conceivable eventuality. Future case law, based on precedent and the principles established in earlier cases, would deal with future eventualities. Those matters may include the right of partners to examine the books and records, the right to take part in the management of the partnership, and questions regarding the expulsion of members.
Those issues may be dealt with adequately in the partnership agreement, but they may not be. Short agreements for smaller partnerships drafted when it was understood that general partnership law would apply may well not include many important provisions.
The amendment would provide that the law with regard to the internal arrangements of an LLP should default to general partnership law. Its wording has simply been lifted from an earlier draft of the Bill. The removal of the provision from the final Bill has aroused widespread concern.
That concern was such that the Government entered into a separate consultation exercise on the specific question of the default provisions. The views of many consultees were summed up in the Government's response document. One paragraph voiced the general concern, stating that
in the absence of an adequate agreement between the members of a Limited Liability Partnership, the relationship between members would be uncertain; there was a strong desire that partnership law should govern the rights and duties of the members of the Limited Liability Partnership … partnership law is well understood by partnerships and practitioners, with the principles established over many years.
That was also the view of the Law Society, which stated:
The Society was concerned with clause 1(5) which disapplies partnership law from limited liability partnerships unless otherwise provided in the Bill. The Society has always considered there to be the need for some default provisions that would operate in the absence of agreement to the contrary within an LLP and which would cover certain basic matters relating to the mutual rights and duties of the members of an LLP.
The Law Society accepted that the Government had amended the Bill to insert one or two of the partnership law provisions in the regulations. However, it is inevitable that some areas will not be covered by the exhaustive and specific list that the Government have included in the regulations and, as always with this Government, it is small business that will suffer. Big, well advised partnerships will be fine, but yet again the Government are creating a complex regulatory regime that puts a premium on being well advised.
The hon. Member for Great Grimsby complained about advisers' incomes, but the pressure for greater regulation is created by him and those who share his philosophy.

Someone has to read, understand and remember the regulations for which the hon. Gentleman continually presses. That will lead to greater demand for expert advice, and therefore higher salaries for those prepared to do that work.
The amendment would reduce the premium for expert advice by making the regime simpler.

Mr. Gerald Bermingham: My sole reservation about LLPs has to do with negligence on the part of professional firms. For example, the negligence policy of a firm of accountants that becomes an LLP may not deal with any negligence created. That has been the case in certain recent takeovers. In the old days, one could at least sue the partners to make up the shortfall on the negligence cover, but that does not seem to be the case now.

Mr. Gibb: The hon. Gentleman raises a point that goes to the heart of the Bill. The aggrieved person can still sue the partner or partners involved in preparing the negligent work. However, why should the law for people in the accountancy or legal professions be different from that covering people in the medical profession, such as nurses? They work for the health service but are not subject to losing all the assets that they have built up over a lifetime.
It is not a matter of fat cats. There are 120,000 chartered accountants in this country. Most of them could never be described as fat cats, and they live under the constant threat that they will lose their lifetime assets because of the negligence of another partner. The Bill goes a long way towards solving that problem, and it is welcome for that reason.

Mr. Bermingham: There is a world of difference between a partnership in a garage business and one involving accountants, estate agents, solicitors or surveyors. The difference is simple: the first provides a service, whereas the professionals provide advice. If the advice is wrong, the damages can be massive. If the service is wrong, the damages are much smaller.

Mr. Deputy Speaker: Order. I think that hon. Members are straying into Second Reading points. The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) should address his remarks to the amendment.

Mr. Gibb: I am grateful to you, Mr. Deputy Speaker, but I do not believe that the distinction offered by the hon. Member for St. Helens, South (Mr. Bermingham) is valid. Advice and services are very similar, in the sense that one either provides a service or advises someone else about it. That similarity crosses all professional boundaries and is not confined to law and accountancy.
The amendment would reduce the Bill's complexity. Even at this late stage, I hope that the Minister will relent and accept, if not its wording, then at least its principles.

Mr. Burnett: I shall not go over material discussed on Second Reading and in Committee, but I was a senior partner in a large firm for more than 20 years and I know how important it is—for the clients and customers of a partnership, as well as for the members of that partnership—to ensure that the partnership ethos is


preserved. It is important that a duty of good faith should exist between the partners, as that is in the interests of clients and customers.
I strongly support the amendment. The Partnership Act 1890 is a good Act, as was said earlier. It provides certainty and simplicity, and will provide some continuity. Simplicity is extremely important, especially for small businesses that cannot afford the advice. They will not necessarily know of the existence of regulations passed by the House.
I hope, even at this late stage, that the Government will remember the interests of small firms and think again on this matter. The fall-back position should be provided by the 1890 Act: it has stood the test of time and is supported by a large body of case law.

Mr. John M. Taylor: Is not one of the limitations of the 1890 Act the fact that it presupposes that ownership, profit sharing and decision making are all in step with each other? In a modern partnership, is it not possible that distinctions may need to be made between who owns, who makes decisions, and who makes profits?

Mr. Burnett: As usual, the hon. Member for Solihull (Mr. Taylor) is correct and makes a good point. However, he knows that it is open to the parties who create a partnership under the 1890 Act to vary the profit-sharing and ownership proportions. They can do so with remarkable simplicity. Although they will have to consider the tax implications of such an action, it is the Act's simplicity that is so important.
It is vital that small businesses do not have to fall back on the more tortuous and complicated Companies Act 1985. I understand that there must be intricate provisions under that Act relating to disclosure, and that the Insolvency Act 1986 also has a part to play. Even so, for the reasons that I have given, the 1890 Act is an excellent piece of legislation and should not be rashly discarded in the way that the Government propose.

Dr. Howells: I acknowledge the very proper concern expressed in the amendments in the name of the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), and the support given by the hon. Member for Torridge and West Devon (Mr. Burnett). I will try to give the amendments the respect that they deserve, because there is no question but that this is an important point. However, I will explain why I will be resisting the amendments—much to the disappointment, I know, of the hon. Member for Bognor Regis and Littlehampton.
Throughout the Bill's passage, there has been a great deal of debate about partnership law and its application, or non-application, to limited liability partnerships. A general application of partnership law to LLPs, very similar to what is proposed in amendment No. 1, was contained in the draft Bill published in September 1998. Subsequently, we took the decision to remove it. Nothing has yet led us to conclude that we were wrong to do so, and we remain opposed to any attempt to reintroduce it. Let me explain why.
As the hon. Gentleman informed us, the main point is that an LLP is a body corporate, while a partnership is not. That is a fundamental difference. So because a

limited liability partnership will be a legal entity separate from its members, its clients will be able to enter into contracts with the LLP itself, not the members. An LLP will also be able to hold property. In addition, because of its separate legal status, an LLP will continue until it is formally wound up, no matter what changes occur in its membership.
A partnership, however, exists only because the partners are carrying on business together, and it has no separate life of its own. Contracts are between third parties and the partners themselves, and changes in partners will cause the partnership to dissolve, although the partners can make specific arrangements to prevent that from happening.
Many of the provisions of the Partnership Act 1890 would be inappropriate for an LLP. Sections 1 to 4 deal with the nature of the partnership. They are of no relevance to limited liability partnerships, because the nature of an LLP is set out in the Bill. Sections 5 to 18 deal with the relations of partners to persons dealing with them. Again, they are of no relevance to limited liability partnerships because clause 6 deals with this for LLPs. Sections 19 to 31 deal with the relations of partners to one another. Only eight of those sections are appropriate to LLPs. The others deal with partnership property, for example, which is inappropriate for an LLP because property can, and is likely to, be held by the LLP, not the members. They deal also with retirement, which is dealt with in clause 4.
Sections 32 to 44 of the 1890 Act deal with the dissolution of a partnership and its consequences. These sections would be inappropriate for an LLP, because it will be a separate body corporate, and winding up will be dealt with by application of insolvency legislation, as the hon. Gentleman hinted. Finally, sections 45 to 50 are supplemental.
So of the 50 sections of the 1890 Act, only eight are relevant or appropriate to LLPs. We intend to apply appropriately modified versions of these eight sections to LLPs by way of regulation to govern the relationship between members where there is no agreement. Yet the amendment suggests that all 50 sections are relevant, when clearly they are not.
The amendment would also apply the general law relating to partnerships. Again, that has been developed with regard to partnerships, not bodies corporate. In particular, over the years the general law has developed the duties owed between partners. We believe that application of these duties to an LLP would be problematic. The existence of the limited liability partnership as a separate legal entity means that members will owe duties to the LLP itself. That is not the case in a partnership. Thus a general application of partnership law could leave members of an LLP facing concurrent duties—duties owed to the LLP, and duties owed to each other. There would be no indication of which duty took priority were there to be a conflict.
The hon. Gentleman helpfully set out in Committee the extent to which the Government have fuelled the debate.


Initially, in response to consultee concerns, we established a small working group of officials and representatives from the profession to consider the options. Discussion ranged over all the points that I have raised, and the conclusion was that the preferred solution was to apply default provisions dealing with the eight relevant sections of the 1890 Act that I have mentioned instead of a blanket application of partnership law.
We went out to consultation on this in February. I am sure that the hon. Gentleman remembers that full well—we said it often enough. The response was in favour of the approach that the Government have adopted. The consultation paper also dealt with the question of whether we should impose a duty of good faith as between members. As I explained in some detail in Committee, we eventually decided against such a duty, although nothing in the legislation would prevent members of a limited liability partnership including such a duty in their membership agreement if they so wished.
Finally, perhaps I might comment on the two main arguments made by those in favour of a general application of partnership law. First, they argue that partnership law is well understood and that the Partnership Act 1890 is a model of simple and elegant legislation. However, as I have said, partnership law is not just the 1890 Act, but an extensive body of general law. This is not simple, even for experts. There are a number of complicated and sometimes vexed issues, which is why the Law Commission is currently reviewing partnership law.
Next, it is argued that it is difficult to see how the expressed intention to create an entity that combines partnership ethos with limited liability can be achieved without applying partnership law. However, the LLP legislation remains silent on the relationship between members, so as to ensure that there is freedom for members in each LLP to develop provisions appropriate to their specific circumstances. It is that flexibility which those partnerships that are planning to convert to a limited liability partnership are keen to see preserved in the new entity, and we believe that that is what will preserve the partnership ethos.
I remain unconvinced that amendment No. 1 is necessary or suitable. I very much hope that the hon. Gentleman will see fit to withdraw it.

Mr. Gibb: That was a useful exchange of arguments that we first rehearsed in Committee. I cannot claim to have heard the four concessions from the Minister which the hon. Member for Great Grimsby (Mr. Mitchell) imaginatively construed from the Minister's first response. I had hoped that the Minister might, at the last moment, give small businesses some concessions, so he will not be surprised to hear that I am disappointed, although not surprised, at his response. On that note, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Mr. Deputy Speaker: As the hon. Member for Great Grimsby (Mr. Mitchell) does not intend to move several of his amendments, we now proceed to amendment No. 7.

Clause 15

APPLICATION OE COMPANY LAW ETC

Mr. John Burnett: I beg to move amendment No. 7, in page 10, line 15, after "to", insert—
'bodies corporate recognised by the Law Society under section 9 of the Administration of Justice Act 1985,'.

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 8, in page 10, line 17, after "to", insert—
'bodies corporate recognised by the Law Society under section 9 of the Administration of Justice Act 1985,'.
No. 4, in page 10, line 22, at end insert—
'(2) For the purposes of this section any law relating to bodies corporate recognised by the Law Society under section 9 of the Administration of Justice Act 1985 shall be deemed to be a law relating to companies or other corporations'.

Mr. Burnett: We discussed in Committee a new clause that contained proposals fairly similar to those in amendments Nos. 7, 8 and 4. Unfortunately, due to a technical hitch, I am now told that solicitors might not be able to set up as LLPs—at least, not as soon as other professions. The Minister was helpful in Committee, and was anxious that solicitors were not discriminated against.
There is a large body of legislation that makes reference to solicitors which will need amending in the light of this Bill. The Law Society was led to believe that this could be achieved by making regulations under clause 15, and that is what I have sought to do. However, I understand that the Law Society has been told that the Minister's Department believes that it may lack the power to make these regulations.
This has led to some confusion, and the Government clearly still intend solicitors to take advantage of this new business entity. Indeed, the Minister assured me in Committee that solicitors would not be penalised or discriminated against in any way. I hope that the Minister can put my concerns at rest.
6.30 pm
However, there is still concern in the Law Society about how the Government will ensure that solicitors are not discriminated against. The Minister suggested in Committee that it might require primary legislation, but what chance is there of a dedicated solicitors Bill before this Bill comes into force in 2001? I understand that another option might be to use orders under the regulatory reform Bill, but that Bill is still in draft. When can we be certain that it will receive Royal Assent in any event? It may be that the necessary changes can be made by using existing powers within the body of legislation affecting solicitors and their practices, such as the Solicitors Act 1974 and the Administration of Justice Act 1985. However, the Law Society is doubtful whether that can be achieved, and I believe that the Department of Trade and Industry also has concerns.
It is surely the neatest solution to use clause 15 to make the necessary changes, in accordance with the three amendments that we are discussing. Even though the DTI recently voiced doubts, the Law Society still believes that the powers in the Bill are adequate, although I understand


that we are waiting for parliamentary counsel to confirm that. I hope that the Minister will let us have his views on that point. The amendment would simply make the power more explicit.
I know that the Minister is extremely concerned about this problem. He assured me in Committee that no discrimination or prejudice would be suffered by the solicitors' profession as a result of the introduction of this legislation. In other words, all trades and professions should be treated equally and must equally be able to become LLPs in 2001. Many thousands of individuals who make a great contribution to the United Kingdom economy wait to hear from the Minister his response to the group of amendments.

Dr. Howells: I rise with appropriate gravity, knowing that thousands of solicitors out there are hanging on my every word. I restate my determination that solicitors will not be discriminated against when it comes to their ability to form LLPs. I am sure that the hon. Gentleman will be pleased to hear of the progress that we have made on this issue since we discussed it in Committee. I said then that my Department was working with the Law Society and the Lord Chancellor's Department to examine the detail of the legislation governing solicitors and consider whether primary legislation was unavoidable and, if so, to determine what specific changes needed to be made.
On the basis of the analysis carried out by the Law Society and the Lord Chancellor's Department to date, we believe that the vires contained in the Bill are wide enough to make the amendments that have been so far identified by regulation to ensure that solicitors may make use of LLPs. Assuming that no further amendments are considered necessary that differ in kind to those already identified, the amendments will be included in the regulations to be made under the Limited Liability Partnerships Bill when it receives Royal Assent. I see no advantage in the amendments tabled by the hon. Member for Torridge and West Devon (Mr. Burnett), and I invite him not to press them.

Mr. Burnett: I am much comforted by the Minister's words. I am grateful to him for the attention that he has given to this important matter. I note his comment that his Department, the Lord Chancellor's Department and the Law Society believe that the vires are wide enough in the Bill as drafted, and in the regulation provisions in clause 15. On that basis, I am happy to beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Mr. Gibb: I beg to move amendment No. 2, in page 10, line 22, at end insert
'(2) Section 458 of the Companies Act 1985 (punishment for fraudulent trading) shall apply to limited liability partnerships.'.

Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss the following amendments: No. 3, in page 10, line 22, at end insert—
'(2) No regulations made under subsection (1) above shall enable indictable criminal offences punishable by imprisonment to be made applicable to limited liability partnerships, other than those which are contained in the Companies Act 1985 and Insolvency Act 1986 as at 1st June 2000.'.

No. 11, in clause 17, page 10, leave out lines 31 and 32.
No. 6, in schedule, page 15, line 15, leave out—
incorporated as a limited liability partnership with that name,'
and insert—
'a limited liability partnership partnership,'.

Mr. Gibb: During a debate earlier this afternoon, we heard from the hon. Members for Great Grimsby (Mr. Mitchell) and for Newcastle upon Tyne, Central (Mr. Cousins) about the vast salaries that some lawyers and accountants are able to command, but I should tell them that they are responsible for those high salaries. The growing body of rules and regulations emanating from this place that have to be obeyed by people in the real world is the cause of those high salaries. The left-wing interventionist philosophy of the hon. Gentlemen and their party creates the pressure for the vast majority of regulations.
When I started work as a tax adviser in 1986 at KPMG, or Peat Marwick Mitchell and Co., as it was then, the tax legislation was contained in one volume of "Butterworths", and it was not a particularly thick volume. Now there are three volumes, each bigger than the 1986 one and printed on thinner paper. The tax practice grew hugely during that period as the volume of tax legislation increased, and the same has happened to company law and no doubt a whole host of other areas of law. I know that most of the increase took place under the Conservative Government, but the pressure for regulation tended to come from the left-wing philosophy in our political regime, although much of the tax legislation was introduced in order to close loopholes.
The consequence is that the demand for people who have read, learned, remembered and understood our legislation is increasing. Although the supply of people prepared to do that kind of work has increased to a degree, the work is painstaking and not terribly exciting. So demand has outstripped supply and the people with experience and ability are now commanding high salaries. The responsibility lies not with the City firms—with KPMG or PricewaterhouseCoopers, which the hon. Member for Great Grimsby kept going on about—but with us in this place.
We pushed through vast volumes of new rules and tried to make it even easier for ourselves by pushing large chunks into secondary legislation, which often are not debated. When they are debated, it is done upstairs in Committee without the possibility of tabling amendments. We are becoming a conveyor belt, mass-producing legislation that we expect people to obey. We deem them to have knowledge of all the laws that we pass. Then some Members of Parliament have the audacity to complain that society is devoting too many resources to reading and applying that legislation.
The Bill is a classic example of how a simple 19-clause Bill can spawn a volume of regulations. Four clauses of the Bill simply empower the Government to create new swathes of regulations contained in a volume the size of the copy that I have here. Clause 16 is a classic Henry VIII clause, and it even provides power to make regulations that themselves can amend primary legislation. There will be no First or Second reading, no tedious Committee stage, Report or Third Reading. The primary legislation will simply be amended by a statutory instrument rubber-stamped by a Committee upstairs.
Throughout the Committee proceedings, when the Opposition have raised concerns—the hon. Member for Torridge and West Devon (Mr. Burnett) shares our concern—about the quantity of secondary legislation, the answer from the Minister was that it was better to use secondary legislation because it was easier to amend. That is the point. We must make it harder, not easier to amend and create new regulations. Some £10 billion of additional regulatory burdens have been piled on to industry in just the past three years. Small business in particular is drowning under the deluge of paperwork. We are becoming a nation of inspectors and regulators instead of shopkeepers and entrepreneurs.
The House of Lords Select Committee on Delegated Powers and Deregulation carried out its duties well when it examined the Bill. It alerted Parliament to the fact that clause 16 is a Henry VIII provision, and we ought to take notice of that, not simply ignore it, as the Government did in Committee. The Select Committee was set up to highlight Henry VIII provisions.
The report also highlighted the Committee's concerns about the use of secondary legislation to create new serious criminal offences. In paragraph 8, the Committee says:
The draft regulations create offences punishable on summary conviction by a fine but the power is wide enough to allow the regulations to provide for imprisonment or for trial on indictment. If, as seems likely, the intention is to provide only for summary trial and a fine, the Committee is of the opinion that it would be better for this limitation to appear in the Bill.
In other words, the Committee assumed that the power was intended to create only minor offences. Its members felt that that was acceptable, but they were alarmed that the way in which the clause was drafted could enable the creation of more serious offences. They thus recommended that the Government should change the clause so as to reduce the power and to confine it only to minor criminal offences.
The Government refused to do so, however. They insisted on the need to incorporate all the existing criminal penalties under the Companies Acts and under insolvency legislation in the LLP regime. That may be fair enough, but it should be done through primary legislation, not by statutory instrument. The amendments would do precisely that; they would incorporate in primary legislation the serious criminal provisions that the Government want to include.
In Committee, something more sinister was revealed: clause 17 is not merely about incorporating in the LLP legislation the criminal provisions under existing company and insolvency law; it is also about enabling new criminal offences to be created by secondary legislation. The Minister said that
it is important to preserve the flexibility to create offences in future and to decide how they should be punished … There may be new crimes for which we shall have to formulate new punishments.—[Official Report, Standing Committee F, 15 June 2000; c. 63.]
There we have it: new crimes and punishments created by secondary legislation. That is wrong. The Minister knows that it is wrong. The House of Lords Committee on Delegated Powers and Deregulation knows that it is wrong. That Committee was set up in 1992 with a specific

responsibility: to point out to Parliament when such matters are wrong. The Minister should take note of the Committee's views and accept our amendments.

Mr. Stuart Bell: I declare an interest as a barrister at law, as an adviser to Ernst and Young and as a contributor to Accountancy Age.
Amendment No. 6 is technical; it may seem minor, but it is important for those firms affected by the provisions and by those with whom they do business. It will mean that the British branch of an oversea limited liability partnership will be able to continue to use a name that concludes with the words "limited liability partnership", "LLP" or their Welsh language equivalents. As drafted, the Bill would make it an offence for people to describe themselves as a limited liability partnership or LLP unless they were incorporated in this country.
The pace of change in the global village is such that, sometimes, the drafting of legislation has difficulty keeping up. That is the case for the Bill. Its present wording would cause problems for all those LLPs that are registered in another jurisdiction, but have a place of business in the UK. It is to the credit of the Government, of Ministers and of the Department of Trade and Industry that they realised that such problems would be caused. I hope that they will look benevolently on my amendment.
It is thought that, for example, there are at least 30 United States law firms with LLP status that have an office in London. Their LLP status shows why the Bill is welcome; it allows British firms to compete on the same basis. The presence of such firms in London demonstrates the dynamism of the international market for legal services.
It must be right, however, that all those doing business with firms whose partners have limited liability should be aware of that fact. The thrust of the policy behind the Bill is that a firm's status should be disclosed, together with the fact that its liability is limited. Under clause 14, the Secretary of State will have power to regulate overseas LLPs. Furthermore, the DTI has suggested that, in due course, it will hold consultations on appropriate provisions.
It would be quite inconsistent with such powers and with such an intention to forbid the use of the LLP title from the outset. Fortunately, the solution is simple; it is to be found in the amendment. The amendment ensures that an oversea LLP will not be prohibited from describing itself as such. A definition of "oversea limited liability partnership" is to be found in clause 14(3): it is
a body incorporate or otherwise established outside Great Britain and having such connection with Great Britain, and such other features, as regulations may prescribe.
The practical effect of that is that regulations will determine precisely which LLPs will be entitled to the benefit of the amendment. I know that those firms with limited liability that have a place of business in the United Kingdom are also subject to regulations under clause 14.
6.45 pm
The amendment reflects the on-the-ground reality of international law practice and recognises the realities of the globalised economy. I am grateful to the Minister and to his Department for acknowledging that. The amendment also serves the public interest by communicating to the public


the status of business organisations. In those circumstances, I hope that the Minister and the whole House will welcome the amendment and further its passage onto the statute book.

Mr. Burnett: I speak to amendments Nos. 2, 3 and 11, tabled by the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) and his hon. Friends. As the hon. Gentleman was kind enough to point out during his speech, Liberal Democrat Members deprecate the use of regulation to introduce so many of the provisions under the Bill; such power is utterly unsatisfactory. Most pernicious of all are new regulations that could deny individuals their liberty. They should not be incorporated in law except through primary legislation. That must be clear to all Members of the House.

Dr. Howells: I shall deal with amendments Nos. 2, 3 and 11, before dealing separately with amendment No. 6, proposed by my hon. Friend the Member for Middlesbrough (Mr. Bell).
In Committee, the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) expressed concern: first, that we were intending to apply to members of an LLP existing criminal offences that apply to company directors and are punishable by imprisonment; and, secondly, that those offences were to be imposed by secondary legislation. He expressed further concern that the power in clause 17 was wide enough to allow the creation in regulations of new offences that may also be punishable by imprisonment.
If I understand the hon. Gentleman correctly, amendment No. 2 is intended to probe why we have not included in the Bill all the offences punishable by imprisonment. Any alternative interpretation does not seem feasible. It is our intention to include section 458 of the Companies Act 1985 in regulations alongside other offences, and I cannot imagine that there is anything so special about that section that it should appear in the Bill when other sections—such as section 450, which makes it an imprisonable offence to destroy, mutilate, falsify, or alter documents—remain in regulations. Nor can I imagine that the intention is to place section 458 in the Bill as the only provision punishable by imprisonment. How would we justify providing that, in some circumstances, members of an LLP would face a lesser penalty than directors of a company for the same offence?
Why, then, have we not put imprisonable offences in the Bill? Because we do not consider it appropriate. As I have made clear, our intention is that the members of an LLP should face the same penalties as members of a company; that seems a reasonable policy objective. The offences arise from various provisions throughout the companies and insolvency legislation. We see no reason to place those provisions in the Bill while others are confined to regulations. In considering the legislation, Parliament concluded that the level of penalty was appropriate to a body corporate with limited liability and to its directors. We see nothing about the limited liability partnership to suggest that application of those penalties to members of an LLP is inconsistent with Parliament's intentions.
I shall now discuss amendment No. 3. I realise that the intention is to restrict our powers to imprison members of a LLP to those offences that are contained at present in

the Companies Act 1985 and the Insolvency Act 1986. The hon. Member for Bognor Regis and Littlehampton would prefer it if, every time that the Government wanted to legislate to make an offence punishable by imprisonment, they could do so only by introducing primary legislation. That is a reasonable case to make.
I shall now discuss amendment No. 11. It is clause 17 which provides that regulations may, in particular, make provisions for dealing with non-compliance with any of the regulations, including the creation of criminal offences. However, amendment No. 11 would remove that provision in its entirety.
The House of Lords Select Committee on Delegated Powers, which the hon. Gentleman mentioned, drew the attention of the other place to the powers to create offences by regulations, and invited it to consider whether the Bill should be amended to provide that such offence should be punishable, on summary conviction, by a fine.
We explained in our response that it was our intention to apply to limited liability partnerships the same offences applying to companies. We noted that the creation of new offences would be subject to affirmative resolution, and our intention to apply existing offences for companies in the first set of regulations would mean that these would also be subject to affirmative resolution.
While we have no intentions at this stage to apply to LLPs anything other than the offences applying to companies, the power is wide enough to create new offences, as I think that our response indicated quite clearly. We believe this to be a prudent provision for the future, and consistent with similar provisions in existing legislation.
I cannot agree that amendments Nos. 2, 3 or 11 are either appropriate or necessary. In addition, if we look at their practical effect, we can see that they would be highly problematic. Amendment No. 3 is to clause 15, and to regulations made under subsection (1) of that clause, yet it is the power in clause 14 which provides for the Government to make regulations on the insolvency and winding up of limited liability partnerships or oversea LLPs. Were we to accept these amendments, we would be prevented from making any provision for non-compliance with regulations on the insolvency and winding up of LLPs. That cannot be right.
I shall now discuss amendment No. 6. I am very grateful to my hon. Friend the Member for Middlesbrough for raising this point. Our attention has been drawn very recently to the inconsistency between the drafting of this paragraph, and our statement to the Select Committee on Trade and Industry in June 1999. We told that Committee that company legislation which requires that oversea companies prominently display the company's name and the country in which it is incorporated will also be applied to oversea-registered LLPs by regulation, and that this includes the requirement to display that information on letterheads and on all notices and other publications of the LLP. That remains our intention.
The question then arises as to why we need additionally to prevent the use of the phrase "limited liability partnership" at the end of the title of an oversea-registered LLP. That would cause particular difficulties for existing oversea LLPs, many of whom will be required by the legislation of the jurisdiction in which they are registered, to include those words.
We have concluded that it is unnecessary both to restrict the use of the words "limited liability partnership" in the title of oversea LLPs and to require that they display their place of registration on all their publications. The latter should prove wholly sufficient to notify clients that they are dealing with an oversea entity.
Therefore, while I ask the hon. Member for Bognor Regis and Littlehampton to withdraw amendment No. 2 and not to press amendments Nos. 3 and 11, I will agree to amendment No. 6, tabled by my hon. Friend the Member for Middlesbrough—a rare event indeed in the progress of the Bill.

Mr. Gibb: I will accede to the Minister's request that I ask the leave of the House to withdraw amendment No. 2 and refrain from pressing amendments Nos. 3 and 11, but he was slightly disingenuous when he knew very well the purpose of the amendments. It was not intended to restrict the use of prison in dealing with people who commit serious company law or insolvency law offences. The purpose of the amendments is to point out the very real concerns, raised by the House of Lords Select Committee on Delegated Powers, that it is not proper—it is not right—for new serious criminal offences punishable by prison to be introduced into our legal system by means of secondary legislation.
The salient question is not whether the affirmative or negative resolution procedure is used, but whether the new crimes are created by secondary legislation, which cannot be right. Such a measure should go through the full procedures of the House—First Reading, Second Reading, Committee stage, Report stage and Third Reading—and then pass on into the Lords, so that there is a full chance of the whole nation being aware of the creation of those new criminal offences.
The provisions are very wrong. It is a sad day when our House is rubber-stamping and mass-producing this kind of criminal legislation through secondary legislation. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule

NAMES AND REGISTERED OFFICES

Amendment made: No. 6, in page 15, line 15, leave out—
'incorporated as a limited liability partnership with that name,'
and insert—
'a limited liability partnership or oversea limited liability partnership,'.—[Mr. Stuart Bell.]
Order for Third Reading read.

Dr. Howells: I beg to move, That the Bill be now read the Third time.
The Bill will introduce, for the first time in nearly a century, a new vehicle for carrying on a business. It is the result of three years of consultation and debate with a wide variety of interested and learned individuals. Detailed legislative proposals have been in the public domain since September 1998, and these were scrutinised shortly afterwards by our own Select Committee on Trade and Industry. Since then, the Bill has received close and thorough scrutiny in the other place and by Members of this House.
The Bill before you today, Mr. Deputy Speaker, is in very good shape, and I take the opportunity to thank all those, on both sides of the House, who participated in the many lively and interesting debates that we have had on the detail to ensure that this is the case.

Mr. Gibb: We have now reached the final stage of the Bill's long journey to the statute book. It is one of the few Bills that the Government have managed to get through both Houses without its becoming logjammed in the congestion that they have created in the other place, so this is quite a novel occasion.
The Bill started life under the Conservative Government, in response to some genuine concerns on the part of the accountancy and legal professions, which were finding it increasingly difficult to retain some of their best people because those people were refusing to accept the risks of becoming a partner.
Listening to some of the members of the Labour party and their deep-rooted prejudices and hostility to accountants has been quite a revelation. There are 114,000 chartered accountants in this country, who work hard for a living, like anyone else. Some are paid well; others are not. But why should that particular line of work expose participants to the risk of losing a lifetime's savings as a result of the negligence of a fellow partner? That approach does not apply to doctors or nurses in the national health service—no one could say that the work of a chartered accountant is more important than that of a doctor or a nurse—or to teachers, or even to bankers in the City of London, so why should it apply to accountants and solicitors?
The Bill simply addresses that historical anomaly and, if anything, it is likely to ease the upward pressure on salaries as firms of solicitors and accountants find it easier to recruit and to retain key staff.

Mr. Fabricant: Is it not also the case that people using those services will also find that their fees are reduced, as was pointed out earlier in our debates this evening, because there will be less need for firms to take out indemnity insurance, which can be so costly nowadays?

Mr. Gibb: My hon. Friend makes a very valid point, and I hope that the hon. Members for Great Grimsby (Mr. Mitchell) and for Newcastle upon Tyne, Central (Mr. Cousins), who tabled several amendments, will take it on board.
The Bill was one of the first to undergo the new procedure of being examined by a Select Committee before beginning its passage through Parliament. The Select Committee report was of a very high quality and certainly resulted in the removal from the Bill of a raft of the more unacceptable and unworkable provisions. However, it is disappointing that the Committee has not been given the opportunity to examine in more detail the whole volume of draft regulations which were re-published in almost final form in May 2000. Given that the meat of the Bill is contained in those regulations, I believe that the experiment of having a Bill scrutinised by a Select Committee has not been completed, given that it has not yet looked at those regulations. The Committee requested to look at those regulations. I hope that before


those regulations are laid before Parliament, a report will be prepared on the volume of draft regulations that the Government have published.
The new draft Bill that followed the Select Committee report went through a further consultation process. However, the final Bill, which started life in another place, gave rise to a number of concerns. My noble Friend Baroness Buscombe highlighted on Second Reading our concern over the disapplication of partnership law and the absence of a default to that law on issues on which the partnership agreement is silent. The Government have dealt with that matter in part, although not satisfactorily.
The Government took on board and dealt satisfactorily with our concern about the absence of provisions to deal with a member wishing to retire from a limited liability partnership. We were also concerned about an ambiguity in the Bill: whether members of an LLP could be construed as employees. That would have significant tax and employment law consequences for that member. Again, Lord McIntosh took on board Opposition concerns and amended the Bill to make it clear that members of an LLP were not to be employees.
We were concerned about the taxation provisions in the Bill and whether converting from a partnership to an LLP would trigger a capital gains and a stamp duty charge. We secured assurances and amendments on that matter in another place. Other issues, such as insolvency and acquisition accounting were also raised and dealt with. Indeed, if Ministers were as responsive to Opposition concerns in this House as they seem to have been, on occasion, in another place, they might not now be developing a reputation for being out of touch and arrogant.
Having said that, the Opposition are pleased that we have ensured that this legislation, which is important for commerce, will go on to the statute book in a better form than it would otherwise have done. We remain concerned about the absence of a general default clause and alarmed at the extensive regulatory powers contained in the Bill, in particular clause 16—the Henry VIII clause—and the power to create new serious crimes and punishments by secondary legislation, which is contained in clause 17.
Those important reservations aside, the Bill is welcome. As my hon. Friend the Member for Lichfield (Mr. Fabricant) just intimated, it will do much to ease concerns among professional firms and we can only hope that that may lead to industry facing smaller increases, or even reductions, in professional fees.

Mr. Burnett: We support the Bill, although some other improvements should have been made. I am encouraged by what the Minister said about its applicability to solicitors.
We discussed clause 7 at length in Committee—the provisions that relate to ex-members. The Minister criticised that clause in Committee, at least by implication, because he considered it inflexible. On report, I tabled amendment No. 5, but it was not selected. I hope that the Minister will think again about that matter. The amendment would have made it clear that clause 7(2) was intended to have a similar effect to section 31 of the Partnership Act 1890, which the Minister conceded was

important and prayed in aid for flexibility. Such an amendment would preserve flexibility with regard to the arrangements for the internal management of a limited liability partnership, which is important.
There are to be further consultations and regulations in respect of taxation. I draw the Minister's attention to the roll-over relief provisions that impact unsatisfactorily on LLPs. Roll-over relief has been an aspect of capital gains tax since the inception of that tax in 1965, I believe. At present, gains on the sale of an asset used in a trade can be rolled over into partnership property—that is, an existing 1890 Act partnership. There are special rules if the property is a wasting asset. Where that roll-over has taken place, the gain is not recaptured if that 1890 partnership comes to an end, provided that the assets are not disposed of. One pays the tax, including the tax on the rolled-over gain, when the asset is sold. If one partner leaves and sells his interest, the gain crystallises at that point and only in relation to that proportion of the asset that is sold. If an 1890 partnership ceases trading and the asset is owned in the same proportions as it was owned in the partnership when it was functioning, the rolled-over gain does not crystallise—it does not do so until the asset is sold.
I hope that the Minister will confirm that that capital gains tax treatment should apply to LLPs as it does to existing partnerships. It is important because there will be no cash to pay the tax until the asset is sold and that will affect small businesses in particular. We talked about that in our debates on report. Small businesses do not have the benefit of high-powered and expensive lawyers and accountants to advise them—we must remember that any trade or profession can become an LLP. First, the small business will not have the cash to pay the capital gains tax. Secondly, small businesses require simplicity. If they cease trading as an LLP, they do not know that rolled-over gains will necessarily have to be payable in those circumstances.
Roll-over relief is important for small businesses—it is important for all businesses—and that is reflected in the fact that the relief for assets used in a trade which has not altered since the inception of capital gains tax in 1965. It is important because it encourages investment, which will encourage jobs. I hope that the Minister will think again about those two matters: clause 7 and the roll-over relief.
Finally, we support the Bill and we wish it a swift Royal Assent so that it can become the law of the land in short order. No body of individuals, no profession and no individual trade should be excluded or prejudiced because they cannot become an LLP at the same time as all the other organisations, trades or professions.

Mr. Mitchell: I had not intended to take part in this debate, but the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) provoked me to do so by arguing that Labour Members were attacking accountants. We were not attacking accountants; we were primarily attacking the power of the big five accountancy houses, which inflict damage on the rest of the profession by their failures, by the sort of cases that come up against them and by stealing business from smaller accountants. We should protect the smaller accountants. We should use the power of Government and Parliament as a countervailing power against the over-weaning dominance of the big accountancy houses, which are now such a power in the land.
In the United States, the Securities and Exchange Commission is attacking such power assiduously. The difference between the two countries is that the Bill is another milestone on the rise to power of such companies. In that situation, it is right to insist on concessions in return for the privilege of limited liability partnership that is being given—concessions on consumer protection, protection for stakeholders and more effective regulation. In this country, those concessions come later, and I hope that they will do so.
The Bill does not show the House at its best. All the speeches, apart from those of my hon. Friends the Minister for Competition and Consumer Affairs and the Member for Newcastle upon Tyne, Central (Mr. Cousins) and myself, were a defence of professional privilege and attitudes, even those of the Liberal Democrats—that party should be speaking for the people, but its members concentrated on the purpose and privileges of solicitors and the professions, not on countervailing their power. That does not show scrutiny at its best.
In conclusion, to recoin an old Irish joke, like the man in Little Grimsby who asked the way to Great Grimsby and was told, "I wouldn't start from here," I would not start from here. Unfortunately, we are doing so. It is right now that we should ensure the proper regulation of the powerful accountancy houses and of the profession. It is right now to enhance the power of stakeholders in response to the privileges that are being conferred on the accountancy profession. It is also right to argue that audit work should be split from the sale of other services. That is the next agenda on reform, and I hope that we go on to undertake it. In conclusion, I thank my hon. Friend the Minister for a sterling performance: he has listened, responded and treated all the arguments with respect, intelligence and courtesy, and I congratulate him on that.

Mr. Fabricant: I support the Bill and, as the Minister knows, I served on the Committee that considered it. The Bill had its genesis in the last Parliament, and it is right and proper that the present Government should continue with the measure.
The hon. Member for Great Grimsby (Mr. Mitchell) gave a long catalogue of complaints against the larger accountancy firms. Even if he were right, I can see no reason why that should inhibit the Bill's passage, as the Bill relates to a very different issue. Certain concerns were raised by my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb). I am especially concerned that, in this Bill, as in other Government Bills, there is yet again, a blank cheque in relation to secondary legislation. Something that is important and ought to be included in the Bill is going to be left to delegated legislation.
On this occasion, the issue is the level of offences and the penalties that will accrue to them. That is particularly strange, as I pointed out in Committee, because clause 9(6) deals with the level of offence. It states:
A person guilty of an offence under subsection (4) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
The Government are therefore able to state what the level of offence should be. It is inconsistent and wrong that they choose not to do so with other offences which are named, quite rightly, in the Bill.
Government Members have expressed concern about the principle of the Bill, which is the removal of joint and several liability of partners. However, as the Liberal spokesman, the hon. Member for Torridge and West Devon (Mr. Burnett), pointed out, along with my hon. Friend the Member for Bognor Regis and Littlehampton, nothing under the law on civil torts prevents a prosecution against a particular partner for duties that are not carried out in accordance with the law. That is right and proper, and that facility will not be removed by the Bill's enactment.
The Bill is needed. The movement since 1890 towards a global economy means that a partnership alone is not enough in this day and age. The hon. Member for Great Grimsby highlighted the growth of the larger accountancy firms. I agree that that has happened in the United States of America, which has protection similar to that proposed in the Bill. We need that protection here in the United Kingdom. As I said in Committee and earlier today, there must be equity between the protection afforded in overseas countries and that offered in the UK.
With those reservations, I join my hon. Friend the Member for Bognor Regis and Littlehampton in wishing the Bill a fair passage. Despite our reservations about it, it will be good for business and, more important, good for British jobs.

Mr. Stuart Bell: I shall briefly commend the Bill and add to the comments of the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb). It is perfectly right to say that the Bill owes its origins to Lord Freeman, who was Minister at the time. It was quickly taken up by the Labour party in opposition, and in our manifesto we said that we would introduce a Bill on limited liability partnerships. We also made a commitment to independent regulation, to which I shall return in a moment.
I commend the hon. Members for Bognor Regis and Littlehampton and for Torridge and West Devon (Mr. Burnett) and Opposition Back Benchers. I have forgotten which queen said that when she went to her grave and they opened her heart, they would see Calais written upon it. [Horn. MEMBERS: "Mary Stuart."' I thought it was, but I did not dare say so on the spur of the moment, in case I would stand corrected later. I commend my hon. Friends the Members for Great Grimsby (Mr. Mitchell) and for Newcastle upon Tyne, Central (Mr. Cousins), as I have a feeling that, when the LLP graves of the accountants and solicitors are opened up, they will see "Great Grimsby" and "Newcastle, Central" engraved inside. Anyone wishing to know what my hon. Friend the Member for Great Grimsby will do for an encore on independent regulation was given a reasonable impression tonight.
Finally, I commend with the utmost sincerity my hon. Friend the Minister and his staff at the Department of Trade and Industry, who have lived with the substance of the Bill for four years—one year in opposition and three in government. The Bill has followed the new parliamentary procedures introduced by the new Labour Government, has gone through a Select Committee and pre-legislation Committees and, after three years, has emerged as better legislation. This is a great day for parliamentary procedure, the Ministry, the Government and the House of Commons. I commend the Bill to the House and, as the hon. Member for Lichfield (Mr. Fabricant) said, I wish it a safe passage.

Mr. Stephen O'Brien: As I did at the beginning of Second Reading and in Committee, I declare an interest as a fellow of the Institute of Chartered Secretaries and Administrators and as a parliamentary adviser to that body. I have been a non-practising solicitor since 1988.
I welcome the Bill and I pay particular tribute to the way in which it was handled in the other place before it came here. I pay special tribute to my colleague Baroness Buscombe who made a number of points that helpfully illuminated ways in which the Bill could be improved and in which the Houses of Parliament could introduce legislation that would be welcome and, we hoped, would improve company competitiveness and international location, so that companies that need to compete can make sure that they reside appropriately in this country.
I made a number of points on Second Reading and in Committee, many of them born out of my personal business experience, in so far as I have dealt with—indeed, I have established—an LLP in overseas territories and was responsible for it. I therefore have some experience which I have tried to bring to the attention of the House. I certainly wish to support fully all the points made by my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) and to back his careful, well-judged scrutiny of the Bill, especially the default provisions and, indeed, the Henry VIII clause.
It is disappointing, however, that the Government's approach to retaining that clause in the Bill has left a residual doubt about whether there will be proper scrutiny of potentially serious provisions that could be added later and which would have a direct effect on the competitiveness and effectiveness of this form of corporate entity. Above all, there is a need to take account of what the hon. Member for Great Grimsby (Mr. Mitchell) said and to ensure that there is total transparency and disclosure, which is the price to be paid for conferring limited liability on what were unlimited corporate entities.
I fully acknowledge that the Government have acknowledged the matters that I have raised, but it is disappointing that they have not acted on a couple of important points that highlight the concerns of those with experience of these issues. I shall re-emphasise a couple of those points, and I crave the indulgence of the House to place them on the record. First, the Bill has focused, quite understandably, on large professional partnerships, and I fear that implications about the way in which the new corporate entity will be used have been missed.
Again, from my experience, I think that it is clear that the LLP will be a very attractive vehicle for overseas partnering and joint ventures in this country. Certainly that is the way in which a similar measure was applied in California and other states in America. It carries certain tax advantages and also rightly reflects the business relationship in manufacturing companies, with which I am familiar.
Despite raising those issues in earlier debates, I have not heard a reply from the Minister, and I note that he has been well supported by a raft of advisers here—they are sitting in the box—and in Committee. I asked whether advice had been fully taken on the experience of those

overseas territories in which there are joint ventures for manufacturing companies, and it would have been helpful to have heard a reply.

Dr. Howells: I assure the hon. Gentleman that we took advice. I understand the point that he makes, and I hope that a wide range of LLPs will be formed.

Mr. O'Brien: That is somewhat reassuring, and I thank the Minister for letting me know that that advice has been taken. It would be helpful to share it a little more fully later.
Such entities will be attractive to property companies, which, as we know, have particular risks and liabilities. The contractual and relationship issues in business are often represented by those concerned with property valuations and the title to ownership, and LLPs will hold a significant attraction to property ventures. There is a demand in property companies to examine—again, reflecting experience abroad—whether it would be appropriate and sensible for their competitiveness to create a mechanism by which a particular partner in such a property LLP could opt out of being bound. At the moment, all LLP members will be entitled to buy because of the way in which LLPs are structured. That is a matter of serious debate because of the nature of accountability and transparency, but is also goes to the heart of the way in which property risk is assessed and represented. Although I mentioned that in Committee, I wanted to place it on the record again now.
The Minister generously suggested that I had made some constructive points during the consideration of the Bill. I am not flattered, because I realise that that is part of the hon. Gentleman's customary generosity. But I am concerned that the points that I made on clause 8 were not taken up. The concern is that there has been an attempt to retain the partnership ethic, by which all members take responsibility, under the requirements of clause 8, unless at least two designated members have been appointed.
Although I can understand the mindset that has driven that provision, I am concerned especially about those LLPs that will not have the appropriate expertise, such as firms that are not accountants or solicitors, which, again, have driven the thinking on the provision. Given the importance of the compliance and governance needed to deliver the very transparency and accountability that is at the heart of the Bill, it would have been appropriate to examine more closely the possibility of having a partnership secretary, company secretary, or a designated person.
There is a distinction to be drawn between members, who clearly carry the overall business responsibility and accountability, and those who are required to deliver compliance and governance. As the Minister has said, nothing precludes an LLP appointing such a person as an employee. However, it would have been better to state that in the Bill, if for no other reason than that similar provisions exist under the Companies Acts for company secretaries in plcs. That confers the necessary status and authority in the corporate entity to command the necessary respect around the board table—or, in this case, around the LLP members table—where advice, high technical competence or a degree of conscience are required of the corporate entity to ensure governance. That is the case not least because things are not always


rosy in partnerships; there will be disputes and factions. At times, it is helpful if such a person sits at the high table with the status and professional expertise to take the necessary action. It is disappointing that that point has not been taken more seriously.
That said, I have thought carefully about the Bill and whether I should have tabled amendments in Committee and on Report. I chose not to do so because the Bill is part of a wider issue; a major consultation exercise is being undertaken on company law reform. That consultation has run somewhat parallel to the Bill, but the latter preceded it because of the way in which the legislation has come about. In that context, I hope and request that the Minister and his officials in the Department will carefully consider the points that I made about clause 8; they are even more important in the context of that company law reform.
We should take advantage of all that has been learned about governance during the past 10 years, not least from the Cadbury report and the ensuing developments. We should at last put the genuine expectations about what is required of companies on a much more sound footing, and perhaps frame them in statute. We should ensure that they have the requisite person in place to ensure good governance. I shall defer pressing that point until we debate company law reform. I thank the Minister for the courtesy with which he has treated the points that I have made. I, too, agree that the process has been worth while.

Question put and agreed to.

Bill accordingly read the Third time, and passed, with amendments.

Fur Farming (Prohibition) Bill

Not amended in the Standing Committee, considered.

Clause 2

FORFEITURE ORDERS

Mr. Malcolm Moss: I beg to move amendment No. 2, in page 2, line 2, leave out 'or other disposal'.

Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss the following amendments: No. 3, in clause 3, page 2, line 22, leave out `or other disposal'.
No. 4, in page 2, line 26, leave out 'or other disposal'.

Mr. Moss: These amendments, which my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) and I have tabled, relate to clauses 2 and 3. Clause 2 deals with forfeiture orders that a court may make if a person has been convicted of an offence of keeping an animal for fur under clause 1. Clause 2(3) states:
a forfeiture order is an order for the forfeiture and destruction or other disposal—
those are the key words—
of the animals.
A similar provision is contained in clause 3(3)(b) and (c), where the words "or other disposal" are used.
The purpose of the amendments is to discover what disposal will be possible, other than the destruction of the animals subject to the forfeiture order. After all, by definition, those provisions will not come into play until fur farming becomes a criminal offence, so there can be no question that the animals will continue to be farmed. Although the Bill refers to animals raised for fur, we know that its thrust is against the 13 mink farms that currently exist in this country. Mink are the only animals likely to come within the ambit of the Bill. Mink are not likely to be regarded as ideal pets for anyone.
We want the Minister to explain why an alternative provision exists, other than for the destruction of those animals. Mink are not only unsuitable to be kept as pets, but they are extremely damaging and dangerous animals in the wild, and significant costs have been involved—

Maria Eagle: Has the hon. Gentleman had an opportunity to read the Hansard reports of the Standing Committee that considered a similar Bill in the previous Session? If he has, he will have found that his questions are answered there.

Mr. James Gray: So what?

Mr. Moss: We want the Minister to tell us why the Bill still contains those words, despite comments made recently in Committee. We recognise that the Bill relates primarily to mink. We know that they cannot be kept as pets and that they create huge damage if they are released or escape into the environment. The only sensible action to take under a forfeiture order will be to destroy those animals.

Mr. Andrew Hunter: I speak in support of the amendments, and I immediately assure the hon. Member for Liverpool, Garston (Maria Eagle) that not only have I read the Official Report of our Committee proceedings this year, but I can vaguely recall the Committee proceedings of the previous year.
I support the amendments, because we have still not received an adequate answer to a point that we have raised time and again. The hon. Lady and the Minister might recall that when I moved a similar amendment last year to a similar Bill, I advanced the argument that my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss) has just made. In reality, we all know that there is no alternative to destruction for the overwhelming majority of animals currently farmed for their fur. Because of that, we are entitled to ask why the Bill contains the words "or other disposal".
On previous occasions, hon. Members who support the Bill, and the cause of which it is an expression, have sometimes intervened with the telling word "chinchilla". I would not claim to be an expert on the habitat and the natural habits of the chinchilla, but it has been offered to us as the reason for the three words "or other disposal" appearing in the Bill. It has been explained that in some circumstances chinchilla can become domestic pets.
That proposition is particularly intriguing. Perhaps chinchilla are capable of becoming domestic pets, but what is the welfare ground for objecting to their being farmed? It would seem that an animal that can adapt itself to domestic circumstances can also adapt to being farmed, if that takes place with the due regulations for its welfare in place. The defence of the words "or other disposal" opens another weakness in the Bill. What are the welfare grounds for the criminalisation of the farming of a particular species of fur-bearing animal?
There is another dimension to the amendments and to the inclusion of the words "or other disposal" that puzzles me. As the House will know, the words stem from a forfeiture order made under clause 2(1), which states that a
court may make a forfeiture order in respect of any animals of that description.
That provision applies to animals that are farmed primarily for their fur, and it refers to those that
are kept by that person when the order is made or which come into his keeping during the relevant period.
I am concerned by a court's ability to make a decision as to whether the forfeiture order should be for destruction or for "other disposal". What mechanisms are being created or exist whereby the court will have the information that, let us say, 3,000 chinchilla are kept on a farm in England or Wales and are nurtured for their fur? How can a court know with any degree of certainty whether those 3,000 chinchilla can be forfeited for a purpose other than destruction, and if so, what proportion of them does that apply to? That argument may seem reductio ad absurdum, but much in the Bill is capable of such an interpretation. Lawyers will have a field day when, as is inevitable, the Bill becomes law.
The amendments point to a weakness in clauses 2 and 3. The court will not be able to make a sound or reasonable judgment under the existing mechanisms as to whether another form of disposal is possible. That brings

us back to a point made by my hon. Friend the Member for North-East Cambridgeshire. We know perfectly well that when a forfeiture order is made, the animals will be destroyed. It follows logically that the Bill should contain provision only for destruction and that the words "or other disposal", which appear in clause 2(3) and 3(3)(b) and (c), should be omitted. That would make the Bill tidier, and it would be common sense.

Mr. Gray: I wish to add a few words in support of the amendments tabled by my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss), to which my hon. Friend the Member for Basingstoke (Mr. Hunter) so ably spoke. I did not have the good fortune to serve on the Standing Committee considering this Bill, or on that considering the private Member's Bill promoted by the hon. Member for Liverpool, Garston (Maria Eagle). Despite the fact that I have read the Hansard reports of both Standing Committees with care, I was not quite as up to date with the arguments as she thought I should have been.
The hon. Lady made an odd intervention that seemed to suggest that if this or any other Bill has been discussed anywhere in Parliament, it is in some way improper to discuss it again on Report.

Maria Eagle: I was not suggesting that it was improper to discuss anything that is in order on Report. I merely pointed out that hon. Members had already been given an answer.

Mr. Douglas Hogg: It was not a satisfactory answer.

Mr. Gray: As my right hon. and learned Friend says, it was not a satisfactory answer. However, the Minister will have an opportunity to remind us of the answer, and we shall have the opportunity to scrutinise his remarks. The hon. Lady intervened on my hon. Friend the Member for North-East Cambridgeshire and suggested that his speech was a waste of time because his question was answered during consideration of an obscure private Member's Bill a year or so ago. That is a fundamental misunderstanding of the way in which the House operates.

Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will not labour that point, because I called him to speak to the amendment.

Mr. Gray: I am happy to do that, Mr. Deputy Speaker.
The provisions are important because they appear to have a sinister undertone. If the Bill brings about the end of fur farming, we must be clear what will happen to the 100,000 mink that are farmed in this nation. If we are not, a Bill that purports to be about animal welfare may turn into one that creates a nightmare for those animals. The House must be clear what will happen if we put mink farmers out of business. What will happen to the mink on their farms? The Bill uses the phrase "or other disposal" and that leaves open the possibility that the animals will be disposed of inappropriately.
I am not convinced that the Bill applies only to mink, although they will form by far the largest category of animals affected. On Second Reading, I asked whether a flock of sheep farmed exclusively to produce sheepskins


would be covered by the Bill. The Minister may correct me later, but my understanding is that the conclusion was that it would be illegal to keep a flock of sheep purely for the purpose of producing sheepskin rugs. Indeed, under the Bill it would be equally illegal to keep rabbits solely for their fur.
Given the state of market for mutton, if not for lamb, I understand why it might be possible for a farmer to decide that a flock of sheep should be kept specifically for the purpose of selling their skins. We do not want to get into an argument about the precise price of mutton, but that must be theoretically possible. If I were a farmer with a flock of sheep on the uplands that I knew would be worthless on the livestock market and I saw the Bill going through Parliament, I might declare today that my flock were being kept purely for their fur. The compensation that we hope will be available under the Bill may turn out to be a great deal more generous than the price that the unfortunate farmer would earn for his flock of sheep in the market.

Mr. Hogg: I am listening to my hon. Friend's argument, and I have heard something of the kind before. He faces one problem, of course: the word used in subsection (1)(a) is "fur". Whatever else is true of sheep, they do not produce fur. Does my hon. Friend agree, nevertheless, that that argument demonstrates the nonsense? It probably would be lawful to breed sheep exclusively for wool, but not lawful to breed mink exclusively for fur?

Mr. Gray: My right hon. and learned Friend makes a good point, but he slips up at the end. It is legal to breed sheep exclusively for the purpose of their wool, which is shorn, and the animal remains alive. If sheep are bred exclusively for the purpose of producing sheepskins, the animals have to be slaughtered in order for the sheepskins to be obtained.

Mr. Hogg: The last thing I want to do is to fall out with my hon. Friend, because basically we are in the same camp. However, the word in the Bill is "fur". Whatever else is the case, sheep do not produce fur. They may produce skins and they may produce wool, but fur they do not produce.

Mr. Gray: That is an interesting point of definition, which is at odds with what the Minister made clear on Second Reading, when he said specifically that in the unlikely event of a flock of sheep being bred for sheepskins, which would require their slaughter, that would come under the terms of the Bill. However, my right hon. and learned Friend may well be right. He speaks as a barrister and charges hundreds of thousands of pounds an hour for just such advice. He may be right that the word "fur" cannot be construed as applying to sheep.

Mr. Hunter: Pursuing my hon. Friend's recollection of the Minister's reply on Second Reading, I suppose that that could also apply to ostrich farming. The bottom has fallen out of the ostrich meat market. Now the birds are farmed for their feathers and, for tourist reasons, for their eggs. If the Minister's answer on Second Reading was correct, the Bill has ominous implications.

Mr. Gray: My hon. Friend makes a useful point. When the Minister responds, perhaps he will tell us what the Bill

intends. If it applies purely to mink, he must say so. If there is the possibility that ostrich, deer, sheep or rabbits may come under the terms of the Bill, the precise means of disposal of the animals becomes a matter of key interest to those of us who are fundamentally concerned with animal welfare.
We need to know precisely what will happen to the animals. There are 130,000 mink and they are breeding all the time. People tend to forget that the animals breed like mink, and presumably the population will increase. Other kinds of animals, such as ostriches and sheep, may come within the purview of the Bill, and it is only reasonable that before we send it on its way from this place, we should know with great precision and clarity the means by which the animals are to be disposed of. It is worrying that that should be left to an open expression such as "or other disposal".
For the purpose of the amendments, it is reasonable to assume that we are dealing primarily with mink, although I look forward to the Minister commenting on other animals. Let us focus on what will happen to the mink. We must be clear whether the compensation terms that are the subject of the second group of amendments are dependent on the mink being slaughtered, or on a forfeiture order being issued against the farmer.
The winding down of the mink farms over a number of years, which seems to be the intention behind the Bill, may be sensible, but the mechanism by which that will happen has not been spelled out in the Bill or in the explanatory notes to it. The Minister may want to explain how that winding-down process will happen.
If we are to presume that the end of mink farming will mean the slaughter of the 130,000 existing mink in the UK, it is important that we should know precisely what the means of slaughter will be. Various ways of killing mink are used. The most common are gassing by carbon monoxide or carbon dioxide. Hon. Members will know that many people commit suicide by carbon monoxide gassing, directing fumes from the exhaust through the car windows. It is said to be a painless way of committing suicide. Carbon dioxide, I believe, is less attractive, but none the less can be used in some circumstances. Another method is by lethal injection, which may occur in some mink farms, although it is difficult to imagine catching the mink in order to administer a lethal injection.
7.45 pm
The reason for those methods of killing is that the perfection of the pelt is important. The only value of the animal is the pelt. If mink were slaughtered by the conventional means used for other animals, the pelts would be damaged. It is important that those of us who care about animal welfare should know whether the farmers will be required to carry out the slaughtering themselves. At present, most slaughtering of mink takes place on the farm, because the transportation of the mink to a slaughterhouse is considered to be a great deal more harmful to them than being slaughtered on the farm. The first question, then, is whether the slaughter will be carried out on the farm.
Secondly, will the farmers be allowed to sell the pelts produced from that slaughtering? I assume so. If that is the case, presumably the slaughtering must occur by means of CO2 CO or lethal injection. Will the Minister tell us which method of slaughtering he thinks will be


most appropriate? Will he consider not just adult animals, but the newly born? Will the newly born be killed by the same means? Will MAFF vets be present to supervise the process? What will happen to the carcases? Will there be proper disposal?
What will happen to the pelts? Will they be sold to British fur dealers, or will that be considered immoral? It is the Minister who changed the thrust of the Bill from animal welfare to morality. If the pelts are not sold to British fur dealers, perhaps there is the strange prospect that they will be sold to foreign fur dealers. Once fur farming is abandoned in this country, foreign fur dealers will make all the money out of it.
The Minister must be specific about what he expects to happen in the process of killing and disposing of the animals. He must also be specific about whether the agreed compensation will be paid if farmers carry out the slaughter voluntarily, or only if they are required to do so under the forfeiture orders. In the latter case, presumably, the farmers will do nothing until the forfeiture orders are served on them. That will not necessarily produce the most orderly or humane way of carrying out the slaughter.
We need answers to various questions about how the animals will be killed, the means by which they will be disposed of, and what will happen to the pelts thereafter. Those are the large questions about the slaughtering process which we believe, unwelcome though it is, will be the result of the Bill. If not, the words "or other disposal" become relevant.
What else could be the fate of those 130,000 mink? We are not sure whether they will be killed by CO2 by carbon monoxide poisoning, by having their little throats slit or by being chucked into a ditch. We are not sure what will happen to them. We must be clear about that. If the Minister makes use of the expression "or other disposal", what does he have in mind?
When Lord Burns considers what will happen to foxhounds if, unfortunately, there were a ban on fox hunting in this country, he suggests that the redundant foxhounds could be re-homed, as he calls it. I am not sure whether that is a word. Is the Minister considering the possible re-homing of mink? I hope not. Perhaps he will require the farmers to keep the mink until they grow old and die, in which case what does he propose to do about all the breeding that the mink will do in the meantime? Maybe he is considering releasing them into the wild. That is a solution that has been put forward by a number of his friends—his past leads me to think that they are his friends—in the more extreme animal welfare lobby. They have released mink into the wild with catastrophic consequences. We see on rivers throughout the country what happens when that happens.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): Will the hon. Gentleman give way?

Mr. Gray: As I have named the Minister, perhaps unfairly, I shall give way to him.

Mr. Morley: I hope that the hon. Gentleman will withdraw. I have spoken out on many occasions against

illegal activities, including the deliberate release of mink into the wild. That has been my long-standing position, and I have been robust about it.

Mr. Gray: If that is what the Minister understood by my remarks, I withdraw. I would not for a moment suggest that he condoned such illegal activities. I know that he has been robust in saying that they must not happen. I also know that he has a long and distinguished record and career in the animal welfare and rights lobby. My precise words were that his friends in the animal rights lobby do the things that I have described. I was not suggesting that he did. If that was his interpretation of my remarks, I apologise. I know perfectly well that he would not take such action.
Perhaps the Minister would not suggest that mink should be released into the wild, but there are certainly those on the more extreme wing of the animal rights movement who would. If that were to happen, I think that hon. Members on both sides of the House, and those on both sides of the argument, know how catastrophic the results would be for native wildlife. I hope that the more extreme voices will not be heard.
Perhaps mink could be sold alive. There are those, perhaps the farmers themselves, who would say, "There are perfectly good fur farmers 20 miles away across the channel in Calais. I shall transport my 100,000 live mink in cages to Calais." Will that be allowed? We no longer allow the export of live calves. Are we to allow the live export of mink? I do not think that we should. The carrying around of mink in cages on lorries is probably less humane than slaughtering them on the farm. That is the view that has been taken by slaughterhouses. I do not think that mink should be exported, and certainly not to Calais. Even less should they be exported to Russia, where much mink farming continues. Similarly, they should not be exported to Canada.
The words "or other disposal" presumably allow the possibility of live export of mink. I suspect that the Minister should ensure that the wording of the clause is made much more precise so that we know exactly what is intended to happen to mink. On Third Reading, I shall talk about the more general principle, but I am not convinced that there is a moral argument in favour of banning fur farming. There may be an animal welfare argument in favour of it, but I suspect that that can better be answered by laying down regulations for the better protection of the animals in their cages, as we did for pigs, for example, than by the enactment of the Bill.
If the Bill is to become law and if we are to see the 130,000 mink now alive disposed of, it is extremely important that we and others who care about animal welfare should know precisely what the Government have in mind for their disposal. Are they to be carried overseas in ships or aeroplanes? Are they to be slaughtered by humane means or by less than humane means on the farm? Are they to be transported to slaughterhouses to be disposed of? What is to happen to the pelts and the carcases?
These are issues that may be dismissed by those who are interested only in the so-called moral issues, but they are important to farmers and to those of us who truly care about animal welfare. That is why these amendments are more probing than anything else. What does "or other disposal" mean? What lies behind the phrase? What is in


the Minister's mind? What other means of disposal could there be? Are those other means of disposal acceptable to a humane society? I suspect that they may not be.
I suspect that the Bill would be a great deal better drafted, clearer, and better from the point of view of the welfare of the unfortunate mink, if the words "or other disposal" were struck out in the three places where they currently appear.

Mr. Owen Paterson: Returning to this subject is rather like the end of term. Several Members now in their places considered the earlier private Member's Bill, served on the Committee considering this Bill, and have also considered it at other stages. It has been rather like a dialogue of the deaf, and now we are all reassembled. My hon. Friends and I are making same old points, which, sadly, have not sunk in with the Government draftsmen, and the Bill is as bad as it ever was.
I shall begin by considering what will be caught by the forfeiture order, and perhaps clarify the matter for my hon. Friend the Member for North Wiltshire (Mr. Gray) and for my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg). I suggest that we consider the problems with which magistrates will be faced if the Bill becomes an Act. The starting point is the definition of fur when deciding where the forfeiture order comes from.
Clause 1(1) states:
A person is guilty of an offence if he keeps animals solely or primarily … for slaughter … for the value of their fur.
I would go to the definition in the Official Journal of the European Communities.

Mr. Deputy Speaker: Order. The hon. Gentleman cannot discuss that matter under the amendments, which relate just to the words "or other disposal". They are narrow amendments.

Mr. Paterson: I am trying to define which animals will be caught by the requirement in clause 2(3), Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. We are discussing an amendment, not a clause. As I have said, the amendment is narrow. Perhaps the hon. Gentleman will have a glance at the amendment and then speak to it.

Mr. Paterson: Thank you, Mr. Deputy Speaker.
The amendments are clear in that they remove the words "or other disposal" from one place in clause 2 and two in clause 3. Surely it is important to define which animals will be caught by the Bill. There is some misunderstanding about what counts as fur. We must consider the problem of a magistrate who has to interpret this measure once it becomes law. When faced with a possible prosecution, how will the magistrate define which animals will be caught by the Act?
Is it sensible to let the clause stand as it is, and provide for either destruction or other means of disposal? Or, as we suggest in the amendment, should destruction be the only solution? I can refer to a lengthier definition, possibly on Third Reading. The definition of "raw fur skins" means not only the skins of mink and rabbit but

those of various types of lamb. Following your instruction, Mr. Deputy Speaker, I shall go into these matters at greater length later in our consideration of the Bill.
There is no problem in disposing of some sorts of lamb by other means. I do not see a problem in selling astrakhans, broadtails or caracals. We can go into that later. A hole in the Bill is that it would be possible to raise a bovine animal for the value of its hide if it had fur on it. The Minister shakes his head. I accept that we have had these disputes in previous discussions. However, as the Bill is drafted, it would be possible to raise a bovine animal such as the belted Galloway, which would possibly have a very valuable hide. That would come under the definition in chapter 43 of the Official Journal of the European Communities. Again, the Minister shakes his head. However, he is wrong. It is an unlikely event, but such an animal could be covered by the Bill.
In any event, I would let the clause stand for the disposal of bovine animals or ovine animals—sheep or goats. I do not see a problem in moving them on. However, we cannot allow mink or smaller farmed animals to be disposed of elsewhere. There is great skill in looking after mink. As we know, there is a huge raft of legislation that binds current farmers. We know that there are only 11 of them. They do their job with great diligence and skill, and there have been very few escapes, apart from unnecessary releases caused by animal activists. It is incumbent upon the farmers to ensure that the animals do not escape. If anyone else is involved, an escape is possible. I have seen horrendous damage done by escaped mink in the borders of Wales where I live. The water rat population has been virtually eliminated and ground nesting birds have been destroyed. This has probably been done by mink which at some stage have escaped from fur farms.
I have great confidence that the 11 fur farmers who remain are highly competent and skilled at their job and well qualified to organise the destruction of the mink. My hon. Friend the Member for North Wiltshire discussed various methods of destruction. As I understand it, every mink farmer in this country gases the mink. The process is extremely swift, and dramatically more humane than what we put cattle through, transporting them long distances under the Government's over-30-months scheme, for example. The mink is transferred from its cage to a small box a few feet away and rendered unconscious within seconds. I think that it dies in under a minute. It is a very swift process.

8 pm

Mr. Gray: For the sake of accuracy, may I say that I think that three methods are permitted under the law: carbon dioxide, carbon monoxide and lethal injection, although I am not sure that any of the farmers use that last method?

Mr. Paterson: My hon. Friend is correct, as always. Those methods are permitted, but all the fur farmers to whom I have talked have said that a carbon dioxide gas box is their preferred method. They are experts and the job is done properly and humanely. The mink hardly know what is happening to them. The farmers have all the facilities for skinning the carcases, retaining the pelts and disposing of the offal and the bodies.
It is most important that those people should be responsible for the disposal of the mink, as transporting them elsewhere and letting less skilled people get involved, however well-meaning they may be, would not be right, because they would not have the necessary experience or equipment.
It is vital for the smaller animals—mink and fox, in particular, although no foxes are farmed here at present—to be destroyed on the spot by those who have looked after them in the preceding years. No one else is qualified, and any other solution could lead to escapes, which can have devastating consequences for the environment, as we have seen.

Mr. Geoffrey Clifton-Brown: I want to raise two points that I raised in Committee—people feeling so desperate that they release the animals into the wild, and the sale of animals into Europe where there is no protection and from where the pelts could be reimported into this country. That would be an act of folly involving a great deal of taxpayers' money.
I want to remind the House of what the Bill provides for, as that will set the scene and explain why the people to whom the provisions apply may be in a pretty desperate state. They will have committed an offence, as provided in clause 1(1) and (2); they will have been fined by the court; the court will have issued a forfeiture order, as provided in clause 3; and an appeal may have taken place. The poor mink farmer will have had considerable legal procedures deployed against him by the time that the destruction of the animals is ordered. We need to be sure when we pass legislation that it is crystal clear and nothing is left to chance. The words "or other disposal", which the amendments would delete, leave matters to chance.
When the courts have acted as I have described and the fanner has been fined up to £20,000, as provided in clause 1, he will then, under clause 3, have lost all his rights to the animals, which I assume means that he will get no compensation, yet he will be faced with the costs of disposal. I am very concerned that, under such circumstances, a desperate farmer or his friends may simply say, "Well, we've gone through all this, so let's just let them out."
When some animal rights activists released some mink, the effects on the local wildlife were absolutely devastating. Mink are some of the most vicious animals in this country. I may be one of the few people in the House who has been close to them, and I can tell hon. Members that they are absolutely vicious. When they are cornered, they take no hostages and can do very considerable damage to a human being.

Mr. Gray: I have enjoyed listening to my hon. Friend, but I must take issue with him. I can imagine no circumstances under which mink farmers, who are responsible and sensible people, would release their mink into the wild. He is wide of the mark in suggesting that. The people who would do that are the animal rights activists, who have no conscience and no control.

Mr. Clifton-Brown: I hear what my hon. Friend says, but a mink farmer who has lost all his rights to

compensation, has been fined and issued with a forfeiture order, and will be involved in considerable expense, may well be tempted to let the animals out rather than foot the bill for their destruction.
I was describing the effects on wildlife and the danger to human life that would follow.

Mr. Hunter: I want, with a constituency point, to encourage my hon. Friend to pursue that line. Mink released in the south of Hampshire have made their way north to the Basingstoke canal in the vicinity of the village of Greywell, and the devastation being caused to wildlife there is quite horrific. I was especially disturbed when a well-known animal welfare supporter in the area wrote to my local paper extolling the virtues of mink living in the wild. Some people's attitude on the issue is incomprehensible.

Mr. Clifton-Brown: I totally agree. Any animal lover who wants to see mink living uncontrolled in the wild really does not understand them. They are absolutely vicious creatures and will kill other wild animals and pose a distinct threat to any human being who gets near them.
I take the point of my hon. Friend the Member for North Wiltshire (Mr. Gray), but if there is the remotest chance of the Bill encouraging the release of mink, we should be extremely careful about it. I accept that the Bill's main purpose is to ensure that the farming of mink ceases, so the danger will also cease over a period.
My other fear is that the words "or other disposal" could allow the animals to be sold into Europe, where mink farms exist perfectly legally. The Minister said:
I might add that there is nothing to stop farmers winding down their businesses immediately if they so choose. Disposing of their stock will not preclude them from the compensation scheme.
He was talking about a time before the forfeiture order is issued. I assume that once the order is issued, farmers will not be entitled to any compensation, but perhaps he will clarify that when he winds up.
The important part of the Minister's comments is:
It would certainly be legal to sell breeding animals—abroad, for example—in the winding-down period, although farmers would not be able to claim compensation for the livestock because they would have received money for it.
Of course that is right.
After the winding-down period, of course, it would be illegal to have those animals.—[Official Report, Standing Committee E, 6 June 2000; c. 82.]
Although it would be illegal to have the animals, farmers would have them—otherwise, the court would not have issued a forfeiture order. The court would have to consider how best to sell the animals and might well decide that it would be perfectly legal to export them to be kept in Europe. It would be totally unacceptable if we used taxpayers' money to compensate for the cessation of such businesses only to find that they were carried on in Europe and that the pelts, either raw or in clothing, were exported to this country.

Mr. Hogg: In fact, the animals would not need to be exported so far. Under the "other disposal" provision, the animals could be exported to elsewhere in the United Kingdom to which the provisions of the Bill do not apply, such as Northern Ireland.

Mr. Clifton-Brown: I am grateful to my right hon. and learned Friend for raising that point, too. Such action is a distinct possibility as the Bill covers only England and Wales.
When I raised the point in Committee, the Minister replied that it would be up to the Scottish Parliament to make provision in Scotland and the Northern Ireland Assembly to make provision in Northern Ireland. There is a distinct danger that unless we get this legislation right tonight, farmers who wish to remain in business will relocate their operations in those provinces. I cannot see any reason why they would not be compensated for going out of business, but could then set up another organisation in Scotland or Northern Ireland for the same animals. A little nonsense is creeping into the Bill and the Minister must say what steps he will take to stop the exploitation of such lacunae.

Mr. Gray: I am sorry to interrupt my hon. Friend's flow for a second time and shall try not to do so again. He has brought to mind a peculiar thing. Hon. Members who represent Scottish constituencies will vote to close mink farms in England, yet, as my hon. Friend describes, it is perfectly possible for the same mink to be exported to their Scottish constituencies, where fur farming will continue unless the Scottish Parliament decides otherwise. Is not that absurd?

Mr. Clifton-Brown: I am sure, Mr. Deputy Speaker, that you would rule me out of order if I followed my hon. Friend down that path, but devolution creates all sorts of problems and anomalies. I have described the possible lacunae. Somebody could move their operations, perhaps under another guise, to Scotland or Northern Ireland, and perhaps not claim compensation for the animals because they retained, sold or were deemed to have sold the animals, and nevertheless claim compensation for clearing land, loss of business, good will, loss of earnings and all the things that we shall discuss in the next debate on compensation provisions.
Amendment No. 2 is interesting. The Minister will have to tell us very clearly what he has in mind in including the words "or other disposal". There will be circumstances that none of my hon. Friends or myself has thought of in which animals could be disposed of. I have no doubt that people in desperate circumstances will think of all sorts of ways. They may take advice from expensive learned friends, such as my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg), and find ways to exploit the Bill. Therefore, it is ever more important that we save them the trouble of doing so and make the Bill clear.

Mr. Paterson: On my hon. Friend's comment that the chances are that farmers will move elsewhere, the only known case is in Austria, where Mr. Pfeiffer moved from lower Austria 30 miles over the border to the Czech Republic.

Mr. Clifton-Brown: I am grateful to my hon. Friend for that information. It is interesting, if not directly related to the amendments.
The point at issue is that we are depriving people of their livelihood and therefore need a Bill that is utterly fair and clear. Unless it is, there will rapidly be a challenge in the European Court of Human Rights. That is all the more likely if, having drawn attention to the point, the Minister is not crystal clear in his answer. I have no doubt that when the European Court considers whether such a case should be brought before it, it will look carefully at the

account of this debate, how the matter was raised, precisely what was said, and the Minister's reply. I look forward with interest to the Minister's reply, and to his response to the amendments on compensation.

Mr. Hogg: I begin with an apology for arriving late. I was attending the puppy show of the Blankney foxhounds. I wanted to do so in order to show my support for fox hunting. When I saw the puppies and reflected that, if a Bill on fox hunting is ever passed, they will not live their natural lives, I felt absolute outrage.
It is entirely right that the House should press the Minister on exactly what is meant in the Bill. My approach is a somewhat narrow one. I begin by asking myself what we are discussing—it is the forfeiture and disposal order. That relates exclusively to the order that will be made by a court on conviction. Therefore, the question that we need to address is what meaning the court will attach to the phrase "other disposal"? The fact that mink farmers might or might not release their animals into the wild is nothing to do with the clause. The only question is what it means for the court.
The principal forfeiture and destruction order is fairly clear. It is the ability to order the death of the animals. That is not very obviously in the interests of animal welfare. Indeed, hundreds of thousands of mink will no doubt be put down as a result of the Bill if it is enacted. I do not understand how that can be justified in animal welfare terms, but I shall address that matter on Third Reading.
What does the phrase "other disposal" mean? Clause 1(1) determines that the offence is keeping animals for certain specified purposes. It follows that, if a person is keeping an animal of the kind in question other than for those specified purposes, he or she is not committing an offence. Therefore, the phrase "other disposal" is put there to enable the court to make an order disposing of the animals by entrusting them to a person or groups of persons who can hold them otherwise than in breach of clause 1.
I suppose that what is being contemplated is that a court might wish to make an order directing that the animals be held by a zoo, or that somebody might apply for the animals to be entrusted to them to hold them as pets, and in those circumstances an offence would not be committed. Or, as my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) said, they might be exported to some country outside the United Kingdom. Those are theoretical options.
We are entitled to say to the Minister that we want to know what is envisaged by the phrase "other disposal". There is a theoretical justification for giving courts such latitude. It may well be that it is sensible to give the animals to a zoo, but it would be helpful for us to be told what is contemplated by the phrase "other disposal". At the moment, other than exporting the animals, giving them away as pets, entrusting them to a zoo or using them for animal experimentation—another possibility on which I should like to hear the Minister—it is difficult to see what is the scope of the phrase, so let us have some guidance.

Mr. Clifton-Brown: My right hon. and learned Friend has thought of another possibility—that the animals might


be given away as pets. Given what I have said about their viciousness, would not a court be acting somewhat irresponsibly if it were to consider that, because mink are wholly unsuitable for that purpose?

Mr. Hogg: I agree with my hon. Friend, but the Bill does not preclude that happening. The Bill is thoroughly bad and I shall say so on Third Reading, but if we are to have it, it is difficult to see why anything other than a destruction order is available to the court. The phrase "other disposal" admits of too much uncertainty and does not give sufficient clarity to the courts. I hope that the amendments will be accepted and that the phrase will be removed. I doubt that it has an effective purpose and I suspect that it produces a lack of clarity, which we would regret.
My hon. Friend the Member for Basingstoke (Mr. Hunter) referred to the dangers of the escape of such animals into the wild. As anyone who knows anything about the countryside knows full well, that is a serious point. If the court makes an order for "other disposal"—not a destruction order but another disposal order—that increases the prospect of the animals escaping into the wild. If, for example, the court makes an order enabling a third party to keep the animals otherwise than for the purposes in clause 1, which is perfectly lawful, who is to say that the animals will be safely contained in their new home? They might escape. Or if, as my hon. Friend the Member for Cotswold said, the order is for export elsewhere, the animals might do a bunk on route, so we will find ourselves faced with escaped animals.
If I am honest, I am bound to say that this is an odious little Bill. It is political correctness run mad, and I hope that the other place kicks it out. Despite its being an odious little Bill, we must give it serious consideration because it is before the House, but the points made by my hon. Friends on the amendment are sound.

Mr. Clifton-Brown: Would my right hon. and learned Friend, who is much more qualified than I am in this respect, care to comment on the last point that I made in my speech—that we need to pass clear legislation in the House, otherwise the challenge in the European Court of Human Rights will be all the greater?

Mr. Hogg: My hon. Friend has a point, but I am rather surprised that the Bill is compatible with the European convention on human rights. I observe that there is a declaration of compatibility, but the Parliamentary Secretary will know full well that article 1 of the first protocol—

Mr. Deputy Speaker: Order. We are considering the amendments to the Bill, not the Bill in its entirety. The right hon. and learned Gentleman is now dealing with the merits of the Bill.

Mr. Hogg: I was responding to the question asked by my hon. Friend the Member for Cotswold.

Mr. Deputy Speaker: I should have stopped the hon. Member for Cotswold (Mr. Clifton-Brown) then.

Mr. Hogg: I should not have given way to my hon. Friend, but it was an enticing question.
I can understand the theoretical purpose for the other disposal order. There may be a theoretical cause for it. The Minister must amplify the theoretical cause with illustrations. Giving the animals to a zoo, transporting them abroad or allowing people to hold them as pets in circumstances not in breach of clause 1(1) are theoretical possibilities, but they are pretty bad ones. In truth, the only appropriate order is a destruction order. If I have the good fortune to catch your eye, Mr. Deputy Speaker, I shall speak on the matter on Third Reading, but I am bound to say that this is a pretty awful Bill.

Mr. Morley: The debate was not entirely illuminating. The provisions are simple, and the answers to some of the questions are straightforward. The intention is to give the courts the discretion to deal with the disposal of animals, depending on the circumstances of each case.
Most hon. Members have focused on mink, and they are right that humane destruction would be the most appropriate way of dealing with mink in the circumstances that we have considered. In answer to the hon. Member for North Shropshire (Mr. Paterson), any destruction would be carried out in accordance with current regulations, which already govern the humane destruction of mink. There will be no change to that.
The hon. Member for North Wiltshire (Mr. Gray) was a little confused. We are considering the time when the Bill is in force, and people who deliberately break the law by keeping animals to farm their fur. We are not discussing existing fur farmers, who have a period in which to wind down their business, and will carry on in the usual way under current regulations, which safeguard the welfare of mink.
The only realistic option for mink is probably humane destruction, but other species may be caught by the provisions, and other options may exist for them. It is therefore appropriate to give the courts some discretion to deal with each case on its merits. They will be advised by Ministry officials from the state veterinary service or the Farming and Rural Conservation Agency about the most suitable option. Some organisations or groups might wish to take the animals.
Hon. Members asked about chinchilla, which could possibly be farmed for fur. Chinchilla can make suitable pets. Their case would depend on the number of animals and the availability of disposal. It is appropriate that the courts should be able to exercise their discretion so that the individual merits of each case are considered.
I remind Conservative Members that one of the problems with the Dangerous Dogs Act 1989, which the previous Administration introduced, was that it was too narrow. That Act gave the courts no discretion, or any way of taking individual circumstances into account. Destruction of the animal was the only option available under the Dangerous Dogs Act. We all know the problems that that caused, and why the legislation had to be amended to include the sort of discretion for which the Bill provides. Under the Bill, courts can consider each case on its merits and determine the most appropriate course of action.
It would not be appropriate to export mink that were seized under a forfeiture order. Humane destruction is clearly the most appropriate option in such circumstances.

Mr. Hogg: The Under-Secretary used the words, "would not be appropriate". Does he claim that such action would be unlawful?

Mr. Morley: As the right hon. and learned Gentleman knows, that is a matter for the courts. However, I cannot envisage circumstances in which the courts would deem the export of live mink to be appropriate disposal. That does not seem rational, and I do not believe that the courts would consider that option.

Mr. Clifton-Brown: The Under-Secretary was courteous in Committee, and he has been courteous now. I cited Committee Hansard, because the Under-Secretary said that it was perfectly legal to sell the breeding animals in the winding-down period. No regulations would prevent their export to Europe in that time. Why, therefore, should it not be legal for the court to make a forfeiture order and have the animals exported?

Mr. Morley: There is a clear difference. It is theoretically legal to export to Europe now—I cannot envisage circumstances in which fur farmers would want to do that—because until the Bill is enacted, there is a winding-down period for existing fur farmers. In that period, the farmers will continue with a lawful business, and in such a business there are no restraints on trade. If fur farmers chose to sell animals abroad in that winding-down period, they would be free to do that. When the Bill becomes law, the keeping of animals for fur will be illegal and it would be illogical to allow the animals to be exported. It would undermine the whole point and thrust of the legislation.

Mr. Gray: Let us imagine a fur farm in Northumberland with a forfeiture order against it and, across the border in Scotland, the Scottish Parliament have decided not to make the practice illegal. Surely it would be sensible for the English court to decide that the animals should be exported 10 miles up the road to Scotland where they could still be legally farmed.

Mr. Morley: No, it would not be sensible, not least because the Scottish Parliament is introducing parallel legislation to deal with the matter. I understand some of the points made by the hon. Member for North-East Cambridgeshire (Mr. Moss), and one or two were sensible. However, some of the points made in the debate drifted into realms of hypothetical fantasy. I want to reassure the hon. Gentleman that, because of the fair points that have been made about the nature of mink, the only option for the court would be humane destruction. However, we should give the court some flexibility to deal with each case on individual merits.

Mr. Moss: The Minister has mentioned only one other species so far—the chinchilla. It was also the only other species he came up with in Committee.

Mr. Morley: Hamsters.

Mr. Moss: The Minister is right—he also mentioned hamsters in Committee, but I have not come across

anyone raising hamsters for their fur and nor am 1 likely to do so. I am surprised that the Minister has dragged out the hamster illustration again. Let us be honest about the Bill and admit that it is aimed directly at mink farming.

Mr. Hogg: My hon. Friend seeks other examples, but he will know that the Prime Minister has created many peers who wear robes trimmed with ermine. I suggest that one other animal likely to be affected by the Bill—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order.

Mr. Hogg: The animal used for ermine—

Mr. Deputy Speaker: Order. The right hon. and learned Gentleman will sit down when I am on my feet and will not ignore the Chair. He has already been spoken to by the Chair for roaming outside the scope of the amendment, and his latest attempt is a gross abuse.

Mr. Moss: We rule out the hamster illustration, so the only other example cited by the Minister is the chinchilla. As far as I know, there are no fur farms for ermine in this country. The Bill is aimed directly at mink and, with the Minister's assurance that his advisers will always recommend destruction of the mink in the right circumstances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5

COMPENSATION FOR EXISTING BUSINESSES

Mr. Moss: I beg to move amendment No. 5, in page 3, line 14, leave out from "authority" to "by" in line 15 and insert "shall".

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 6, in page 3, line 20, leave out from beginning to "in" and insert "The scheme shall".
No. 7, in page 3, line 20, after "particular", insert—
'set up an independent advisory body in accordance with Schedule (Independent Advisory Body) to advise the appropriate authority on all aspects of the scheme.
(2A) The independent advisory body shall in particular—'.
No. 8, in page 3, line 29, after "claims", insert—
'(2B) In determining its recommendations on compensation to the appropriate authority the independent advisory body shall include provision for

(a) the payment of reasonable professional fees for advice for persons making claims,
(b) the payment of interest to be calculated on a compound basis on the total of agreed final settlement payments, or as may be determined by arbitration, payable from the date of the settlement or of any other time limit imposed for compensation payments, whichever is the earlier,
(c) the payment on account where requested by the claimant of 60 per cent. of the amount of compensation agreed between the claimant and the appropriate authority, or in any other case of the amount of compensation that the appropriate authority estimates the claimant is entitled to under the scheme, within three months of the submission


of the scheme, or on the expiry of any time limit imposed for the payment of compensation, whichever is earlier,
(d) consideration to be given for a payment to be made in appropriate cases to meet the costs of clearing the land in question of buildings or other fixed equipment utilised by the business,
(e) the payment of expenses incurred by the claimant as a result of the coming into force of section I including forced sales, premature termination of contracts, and any other reasonable disturbance costs.'.

No. 10, in page 3, line 39, at end insert—
'(4A) The agreement of the appropriate authority to refer a dispute as to a person's entitlement to arbitration under subsection (4) shall not be unreasonably withheld.'.
No. 11, in clause 7, page 4, line 9, leave out from "force" to end of line 10 and insert—
'on the day on which this Act is passed.'.
New schedule 1—Independent Advisory Body—

1. The independent advisory body shall be made up of no less than three and no more than seven members.
2. The members shall possess such professional qualifications as the appropriate authority shall specify in order to provide an independent and comprehensive assessment of all those criteria necessary to arrive at an independent and fair market valuation of the businesses affected by the coming into force of section 1.
3. The independent advisory body shall be set up no later than the day after the day on which this Act is passed.
4. The independent advisory body shall be free to seek guidance on valuations from professional and political associations involved with fur farming in any country of the European Union.
5. The independent advisory body shall be recompensed for reasonable expenses incurred in the course of its duties.
6. The independent advisory body shall report back to the appropriate authority no later than 6 months prior to the date on which Sections 1 to 4 shall come into force.'.

Mr. Moss: Amendments Nos. 5, 6, 7, 8 and 10 relate to clause 5, which deals with compensation, and amendment No. 11 relates to clause 7. Clause 5 is, after clause 1 which creates the offence, the most critical clause in the Bill because it addresses the issue of compensation. The private Member's Bill showed little sign of any real compensation, but this Bill has beefed it up. We welcome the fact that the Government have moved to address the issue of compensation more meaningfully.
As the Minister has said on many occasions, clause 5 is an enabling clause. Amendment No. 5 would change the word "may" to "shall" because we want to be sure that the Government are totally committed to introducing a compensation scheme. They have promised it and they have given assurances, but it is not in the Bill in a strong enough way to give us the reassurance that we seek on behalf of the 11 fur farmers who are looking for sensible, fair and proper compensation.
Amendment No. 6 follows on from amendment No. 5. It would insert the words, "The scheme shall". It would require the appropriate authority—which of course is the Minister—to set up a scheme.

Mr. Hogg: I am trying to relate my hon. Friend's amendments to the clause. My understanding of the practical effect of the amendment is that it would require compensation in Wales, as the Bill already requires a scheme in England, but not in Wales. Am I right?

Mr. Moss: That certainly was not the intention of the amendment and I am puzzled by my right hon. and learned Friend's interpretation. According to the present wording of the Bill in subsection (1),
The appropriate authority may (and in the case of the Minister of Agriculture, Fisheries and Food, shall) by order make a scheme for the making of payments by that authority.

Mr. David Heath: My interpretation of the amendment is exactly the same as that of the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg). The appropriate authority can mean only two bodies: either the National Assembly for Wales or the Ministry of Agriculture, Fisheries and Food. The Ministry of Agriculture, Fisheries and Food is required to introduce a scheme in England, so the amendments can affect only the position in Wales.

Mr. Moss: I am slightly puzzled by that conclusion. The amendment is an attempt to impose on the Minister, who is the appropriate authority in England, and the appropriate Welsh Minister, a requirement to introduce the scheme. Amendment No. 6 provides that that scheme shall—not may—fulfil certain functions.
Amendment No. 7 would require the setting up of an independent advisory body in accordance with new schedule 1 to advise the appropriate authority on all aspects of the scheme. It then places further requirements on that independent advisory body.
Amendments Nos. 6 and 7 are crucial in that they would establish a group of independent experts to investigate and assess the compensation requirements of fur farmers who were caught by the legislation. It would make the independent aspect of the compensation scheme completely transparent and would honour the commitment that the Minister repeatedly gave in Committee.
During our third sitting, the Minister promised:
Independent valuations will be conducted not by Ministry staff, but by independent valuers who will talk with farmers about capital and income streams before reporting back to the Ministry. Those professionals can be sent out to farms as quickly as possible, and almost immediately after Royal Assent.—[Official Report, Standing Committee E, 6 June 2000; c. 83.]
We have taken the Minister's words at face value. Indeed, we interpreted them as a commitment or even a promise. The new schedule, which we will come to later, sets out the role and composition of the advisory body. It refers to issues identical to those raised by the Minister—namely, the need to use professionals, and when the advisers should go out to talk to the fur farmers about compensation. We are talking about that taking place as soon as the Bill receives Royal Assent.
Under the Government's proposals, the scheme to be set up by the appropriate authority will have responsibility for implementing clause 5(2). We believe that the Bill therefore gives great control to the Minister and the Ministry. Clause 5(2)(a) requires the authority to specify
the descriptions of losses and businesses to receive payment … and the basis of valuation for determining losses.
Clause 5(2)(b) requires it to specify
the amounts of the payments to be made and the basis on which they are to be calculated.
Clause 5(2)(c) requires the authority to
provide for the procedure to be followed in respect of claims.


Amendment No. 7 would give that role to the independent advisory body. It tasks that body with advising the Minister
on all aspects of the scheme,
and the emphasis is on the words "all aspects". Any independent assessment of a compensation scheme should start from the premise of fairness and proper value. Appointing independent assessors would rescue the Minister from any accusations of organising a stitch-up or of having preconceived notions of valuation that are circumscribed by Treasury-driven financial limits.
The phrase "all aspects" means that all the facets, components, considerations and calculations that must be taken into account when arriving at a fair and accurate valuation shall be part of the assessment. To achieve that, the independent body must be made up of people with a range of professional skills—a point that the Minister has already conceded in Committee.
The independent advisory body must be free to start from basics. There should be a clean sheet of paper, with no preconceived notions as to what is ruled in or out. A lengthy discussion took place in Committee about the financial guidelines set out in the explanatory notes to the Bill. Paragraph 26 of those notes is headed "Financial Effects of the Bill", and states:
It is estimated that the cost of compensation under the Bill for the … 13 mink farms could, in respect of assets, be up to £400,000 and perhaps four times that amount if income were to be compensated.
We pressed the Minister about the upper limit of £1.6 million. Time and again, we asked if it was a predetermined upper limit that effectively set a ceiling on the negotiations on the value of fur farming business. The Minister was helpful in confirming that the figure was not carved in stone:
We will consider carefully whether the figure might have to be varied … We feel that our figure is broadly right, but if some adjustment is required, we shall consider it carefully following the valuations.
Finally, he said:
The valuers certainly will not be instructed to draw up a scheme within the maximum of £1.6 million.—[Official Report, Standing Committee E, 6 June 2000; c. 83-5.]
We feel that the best way to secure that clearly stated commitment from the Minister is to give powers for determining the compensation scheme to an independent body, with no strings attached.
Another vexed issue was whether income would be considered in a compensation scheme. That question was put to the Minister in Committee by my hon. Friend the Member for Cotswold (Mr. Clifton-Brown). The Minister replied:
I can assure the hon. Gentleman that the provision of compensation for income will certainly be considered in the compensation scheme. The Bill makes provision for that.
A little later, the Minister stated:
I have already said that there will be an independent valuation of the businesses, including their income.—[Official Report, Standing Committee E, 6 June 2000; c. 62–5.]
That clear steer from the Minister would help any independent valuers tasked with working up a scheme. It would be an integral part of their deliberations to consider the importance of income under clause 5(2)(a), which requires them to
specify … the basis of valuation for determining losses.

Amendment No. 8 would give a specific responsibility to the independent advisory body to take certain stated considerations into account in determining its recommendations on compensation to the Minister. Such considerations can be summarised as follows—provision for reasonable professional fees, the payment of interest on outstanding settlement payments, a payment on account of 60 per cent. of the agreed amount of compensation, a payment for the cost of clearing land of buildings and fixed equipment, and payment of reasonable expenses in winding up the fur farming businesses.
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Let us look first at proposed subsection (2B)(a), which deals with the payment of legal fees for the advice that fur farmers will need. A similar amendment was tabled when the private Member's Bill promoted by the hon. Member for Liverpool, Garston (Maria Eagle) was considered in Committee. It was rejected because it was too loosely worded, referring as it did to "advisers" in the plural. Those in favour of the Bill argued that that placed no limit on the number of people whom fur farmers could consult, thus creating the need for a blank cheque. Amendment No. 8 is specific, in that it refers to the payment of reasonable professional fees for advice—in the singular. That would, we hope, rule out payments to a long list of advisers.
To my knowledge, no other Government have introduced legislation to ban an entire sector of farming. That places even greater emphasis on the unbiased and independent advice that the fur farming community will require.
It has been standard practice for many years that claimants under the land compensation code are entitled to have their professional advisers' reasonable fees paid for by the acquiring authority. The Bill will impose a compulsory ban on fur farming, which we argue is similar to a compulsory purchase order under the land compensation code. The effect would be pretty much the same in each case—the state uses compulsory purchase powers to confiscate an individual's property.
Fur farming is a very specialised form of farming. We believe that it is essential for the farmers involved to have access to good professional advice, in the consultation period and during negotiations, on the level of compensation to which they feel that they are entitled. The amendment would help to ensure not only that such professional advice was available but that the fees for it would be allowable in reaching a figure for compensation.
Proposed subsection (2B)(d) in amendment No. 8 would provide for the cost of land clearance to be included in any appropriate compensation scheme. In Committee, the Government gave an assurance that, as a general principle, they would consider the cost of demolition in relation to a claim in particular cases. However, they were adamant that such consideration would be given only on a case-by-case basis and on a case's individual merits, rather than blanket coverage. We accept that, and believe that the amendment conforms to that requirement.
Because the Government are proposing a unique measure, and because fur farming is so specialised, there is very little professional opinion available on what effect the ban will have on the future use of these specialised buildings and the equipment that is associated with


fur farming businesses. An example was given in Committee—a farmer in Northumberland had turned some of his sheds over to the growing of strawberries. Other people commented that he had gone out of business, for whatever reason. There are limited other uses to which the buildings can be put. It is important that the cost of demolishing and clearing the land be included in any scheme.
We know that land clearance, especially if someone wants to return the site to a greenfield site that can be farmed in more conventional ways, can be extremely expensive. Figures have been quoted of about £100,000 for a substantial farm of, say, 600 breeding females. Pro rata, that would come out at £17,000 per hundred breeding females. Those are substantial sums in anyone's book, and we feel that it would not be unreasonable that they should be included in the calculations in the compensation scheme.
Proposed subsection (2B)(e) would provide for compensation to cover costs associated with the winding up of a fur farming business. As a general rule, claimants in any scheme of compensation should mitigate their losses wherever possible, but there will inevitably be costs associated with winding up businesses as a result of the coming into force of the offence in clause 1. There may have to be forced sales of capital equipment, land and the property that goes with it. If a farmer was leasing land, there might be costs for early termination of the lease. There is always a cost when people wish to terminate a lease in advance of the appropriate date. Contracts may have been entered into with subcontractors to do work on the farm; they, too, may require compensation.
Proposed subsection (2B)(b) in amendment No. 8 would allow for interest to be claimed on any outstanding compensation and to be payable in the period from the date of the final settlement to that of payment. We hope that whatever scheme the Minister puts in place as a result of the advice that he receives from the independent advisory body will be regarded by all parties as fair and honourable, and that it will not take a great deal of time to reach agreements on the level of compensation. However, in the real world, things rarely go so smoothly.
Negotiation and settlement of claims could take considerably longer than a few months. If negotiations turn out to be lengthy because there are disputes about the scale and the amount of compensation, that may involve the matter going to arbitration, as we know from other parts of the Bill. It may well go to the Lands Tribunal, under clause 5(5). If it does, settlement could take years rather than months. In those circumstances, it would be appropriate for compound interest to be payable on the amount that is finally agreed. The advice to the Government from their working party on compulsory acquisition was that such interest was payable.
Proposed subsection (2B)(c) relates to what we call payment on account. It would allow for interim compensation payments to be paid when the final payment was unreasonably delayed. Since 1973, claimants under the land compensation code have been entitled to request advance payment of 90 per cent. of either the agreed compensation or, more usually, the acquiring authority's initial estimate of their entitlement.

As I have said, it can take months or years to reach a final settlement in practice, especially if the Lands Tribunal route is entered into.
The amendment sets a lower figure than the 90 per cent. under the code; 60 per cent. is fair and reasonable. That would extend to the fur farming industry rights similar to those applicable to land compensation. It would be unreasonable of the Government to reject that proposal. It is in their interest to accept the amendment, because it is likely to enable fur farmers sooner to establish other businesses and sources of income.
Amendment No. 10 provides
That the agreement of the appropriate authority to refer a dispute as to a person's entitlement to arbitration under subsection (4) shall not be unreasonably withheld.
In Committee, the Minister agreed that the Lands Tribunal was a poor long stop for settling disputes. Indeed, the process is notoriously slow and expensive and invariably extremely unfriendly towards claimants.
The inclusion of an arbitration procedure under the Bill is welcome. In the absence of agreement, we would support the selection of an arbitrator by the president of the Royal Institution of Chartered Surveyors. However, under the measure, there is a risk that the Minister could refuse to go to arbitration; or he could wait until the full nine months had elapsed before making his offer and force the claimant to settle at that late hour or face the unattractive option of taking the case to the Lands Tribunal. That would give the Minister unfair leverage in the negotiations. We should like him to accept our amendment, because it would give an assurance to all involved that he would not withhold unreasonable agreement to arbitration if the parties had not reached an earlier settlement.
Amendment No. 11 relates to clause 7. In Committee, the Minister said:
I take the point that some fur farmers may want to get out of the business as quickly as possible; I understand that point … I want the scheme—
for compensation—
to be introduced as quickly as possible in order to assist people.—[Official Report, Standing Committee E, 6 June 2000; c. 81-2.]
He said that it would take a couple of months to get a draft consultation scheme up and running. There would be a two-month consultation period followed by about a month of internal discussions. In the light of those comments and given the desire of the farmers to get the scheme under way as soon as possible, there is no reason why clause 7(3) should delay the implementation of the compensation clause until two months after the Bill receives Royal Assent.
New schedule 1 relates to the independent advisory body. The body should comprise no fewer than three and no more than seven members. The numbers are fairly arbitrary; we want a workable number of people—more than seven would be unwieldy and three is probably the minimum. Our proposal offers the Minister plenty of scope to act as he sees fit.
Paragraph 2 would require members of the body to possess such professional qualifications as the Minister deems appropriate to the job in hand. The RICS should be involved—because of the auctioneers and valuers. An accountant should be included. Someone from the legal side—a solicitor or banister—should be involved;


also perhaps a National Farmers Union representative, and perhaps an expert in fur farming from the European Union. After all, there is a huge fur farming industry in the other member countries of the European Union, and some of those have already considered compensation schemes, so their expertise might be helpful.
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Paragraph 3 of the new schedule requires that
The independent advisory body shall be set up no later than the day after the day on which this Act is passed.
The Minister has suggested that he wants to get this scheme up and running on the day the Bill receives Royal Assent; we would give him an extra day. If the scheme can be set up before Royal Assent, for earlier consultation, we would welcome that.
In paragraph 4 of the new schedule we have suggested that the independent advisory body should be free to have discussions with people involved in fur farming in the rest of the European Union. Although members of the advisory body may not seek that guidance and advice or help, we feel that there should be such a provision because the scale of the fur farming operation elsewhere in the European Union is immense compared with our own. We have 11 farmers; I believe that there are about 8,000 fur farmers in the rest of the EU, so we would argue that the expertise in that business is far greater than in this country, and it would be very helpful if the independent advisory body were allowed, within its articles of association, if I may call them that, to consult in that way.
Finally, paragraph 6 of the new schedule says that
 The … advisory body shall report back
to the Minister
no later than 6 months prior to the date on which Sections 1 to 4 shall come into force.
Clause 7 speaks of
no day before 1st January 2003.
We would say that this advice from the advisory body needs to be on the Minister's desk six months before whatever date he has decided the Bill will come into force. That, on the face of the Bill, is not before 1 January; so if that were to be the date in question, we would be talking about six months before then—the middle of 2002.
I have explained the long list of amendments dealing with compensation. As I said in my opening remarks, the provisions relating to compensation are the most critical part of the Bill as it stands. Only a small number of people are involved, but their businesses are extremely important to them. They are, in the present context, in the main lucrative businesses, and it is important that the processes that deal with compensation should be independent and transparent, and that there should be recourse to all the professional help that is available in order to arrive at fair, proper and adequate compensation.

Mr. Hogg: This is a terribly important group of amendments. I support not the exact wording of the amendments that my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss) has spoken to, for reasons that I shall explain, but their underlying purpose.
First, let me say where my hon. Friend and I are not at one, because I think that my understanding of the group of amendments is slightly different from his. My

understanding of the Bill as it is currently formulated is that the Minister of Agriculture, Fisheries and Food is obliged to bring forward a scheme for England but in the case of Wales it is a matter of discretion. Therefore the effect of amendment No. 5 impacts only on the Welsh dimension; it makes it mandatory for Wales to bring forward a scheme. In principle, that of course is right, although I would have to accept the principles of devolution. It may well be right for the Welsh Assembly to determine whether there should be a compensation scheme within Wales. None the less, in principle, I feel sure that there should be a compensation scheme.
The Bill, as it is formulated, places a duty on the Minister to produce a scheme. The Bill is defective in that there is no requirement—I emphasise that word—as to what should be in the scheme. There is a permissive power to include within it a range of heads of compensation, which are set out in clause 5(2)(a)(b) and (c). They may be included, but do not have to be.
The advantage of the approach of my hon. Friend the Member for North-East Cambridgeshire is that it provides for an independent body to make a recommendation, which has to provide for various forms of compensation. Why is it important that there should be an independent body of the sort recommended by my hon. Friend? In part, the argument is as he has stated it, namely, that we need transparency and independence, because—I now speak with some experience of the matter, if you will forgive my saying so, Mr. Deputy Speaker—all Government Departments are mean. They have to be mean because they are acting within a budget. One can be certain that if the Minister is the sole person or body to set up the compensation scheme, as the Bill provides, it will be done extremely meanly because of the budgetary constraints under which the Department is operating.
Furthermore, a challenge can be made under the Bill only within the framework of the scheme that the Minister has produced. The Minister is not only responsible for the scheme, he is the payer. A successful challenge would have to be within the scope of the scheme that the Minister has produced and that constrains the right of appeal in a way that is wrong.
Another argument is that the European convention on human rights will be in operation from 2 October. One of the consequences of article 1 of the first protocol, and of other articles, is the obligation to pay compensation. Governments may well be moving towards compensation requirements because of that convention and its impact on the compensation duties of Departments.
I point out to the Minister that, as my hon. Friend said, if there is a duty under the European convention to pay compensation, it is pretty certain that the European Court of Human Rights will require that the criteria for compensation should be set out and determined either by statute on the face of the Bill or by some independent body. Otherwise, to return to the argument that I was making a few moments ago, the payer will set up the scheme and will limit the ability of the claimant to challenge it. I very much doubt whether that will be held to be consistent with the convention. Therefore, my hon. Friend is trying to give the Government some reinforcement, although I do not suppose that the Minister will welcome it.
I deplore the measure. It is an odious little Bill. That said, however, we must deal with it as it is. In its present form I suspect that it is not compatible with the European


convention because the compensation provisions do not appear in it in an explicit form and there is no independent body to set out the criteria. Therefore, there is a real danger of a declaration of incompatibility down the track, or an application to Strasbourg.
My hon. Friend the Member for North-East Cambridgeshire is giving the Parliamentary Secretary an opportunity to reinforce the Bill. I told my hon. Friend that I welcomed the purpose of his amendment, but one or two adjustments need to be made if its principle is to be accepted. Neither the scheme in the Bill nor the scheme in my hon. Friend's amendment make a requirement—I underline that word—to pay compensation for loss of profit. It may be addressed in the scheme proposed by the Minister, but it does not have to be.
Why on earth are we not providing for loss of profit to be a mandatory element in the compensation scheme? My hon. Friend's approach, if adopted, would need adjustment in another place to make the provision of a loss-of-profit element mandatory. I also wish to draw attention to the fact that compensation is simply for the value of the animals. The animals themselves have a value, which is different from the loss of profit, although they overlap. The Parliamentary Secretary looks pensive, but I assure him that that is the case. There are two elements: the value of the beast and the damage to the business. When people go out and buy a lot of beasts, they incur costs in acquiring them. Those beasts have a value. Down the track, however, there is a continuing profit for the business. Obviously there is an overlap, but those heads of loss are different.
The Bill or my Friend's scheme, when adjusted, should make provision for mandatory compensation to be paid for the loss of the beasts themselves. My hon. Friend has enabled the House to raise the question of compensation. I welcome his approach, which would impose yet more mandatory duties on the Government. I also welcome it because my hon. Friend suggests that the scheme should include various heads of loss that are not currently included. Personally, I think that he has not gone quite far enough and that the matter should be examined further in another place. However, I have no doubt that he has moved in the correct direction and I support the purpose of his amendment even though, if he will forgive me, I have one or two misgivings about some of its language.

Mr. Hunter: I shall be brief, as the points relevant to the amendments have been expressed clearly by my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss) and my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg).
I wish to pick up one aspect of what my right hon. and learned Friend has just said about the European dimension, which is so relevant to the compensation issue. The Minister will correct me if I am wrong or mistaken, but I have received briefing material which states that the European Commission has advised member states not to proceed with legislation on a national basis prior to the introduction of a directive which is currently being worked on. I have been given a facsimile of a document that purports to be to that effect.
No doubt the Minister will be able to advise me whether that is right or wrong. He will acknowledge that the European Union is beginning to move on that front,

that growing attention is being paid to the issue of fur farming and that, in the course of time, movement is likely. In advancing down the way of national legislation on compensation, I am concerned that, while one or two cases of compensation are perhaps fully sorted out and others are in the pipeline, an entirely different regime will be imposed by the European Union.
I should like the Minister to contemplate that scenario, which is not impossible, and could arise and present enormous difficulties. That possible scenario makes it all the more advantageous and desirable that an advisory body, composed of independent advisers, is created.
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I do not wish to go over at length the points that my hon. Friends have made, but I emphasise to the Minister that, apart from clause 1, which establishes the offence, this is clearly the most critical clause. The Government have moved forward from the position in last year's private Member's Bill. I am grateful for that and readily acknowledge it, but it is imperative that the amendment to substitute "shall" for "may" be included in the Bill.
I have listened carefully to the Minister on numerous occasions on the subject. I think that that total commitment is still not there. The provision is not strong enough. Reassurances are needed. The amendments go significantly towards filling that gap. I hope that the Minister will seriously take them on board.

Mr. Paterson: This is the most important subject of the Bill. It is the first time I know of that a Government have wilfully closed a legitimate business activity which is flourishing in the rest of Europe. For example, fur farming accounts for perhaps 4 per cent. of Danish gross domestic product. I pick up on the comments by my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg). It is important that the Bill has clear provision on a fair and comprehensive compensation scheme, or the Government risk running into fearfully expensive legal actions in Europe.
I pray in aid the National Farmers Union, which as we all know is a non-political organisation. It has made it clear in letters on the subject, including one that I received in January that
Should this legislation proceed it is therefore imperative that the individuals concerned are treated fairly.—[interruption.]
The hon. Member for Liverpool, Garston (Maria Eagle), who promoted the private Member's Bill, is laughing. There are people who have built up businesses for 40 years. It is their life's work. There is a business in the west country that employs 40 people. I do not think that it is a laughing matter. Because she finds the activity distasteful and hides behind the idea that it is publicly immoral, she wants to close it down. The one thing that we must do—

Mr. Deputy Speaker: Order. The hon. Gentleman is already starting to stray. I should like to bring him back to the terms of the amendment, which is about compensation.

Mr. Paterson: Absolutely, Mr. Deputy Speaker. What I am objecting to is that the hon. Lady is laughing at the discussion on compensation.

Mr. Deputy Speaker: Order. There is no need to repeat the point, which I have just ruled out of order.

Mr. Paterson: Moving on to the Europeans, who will pick up the matter if the Bill is not fair? I have talked to Wim Verhagen, chairman of the European Fur Breeders Association, who is adamant that it will take the measure to the European courts if there is no fairness in this country. I pray in aid Helge Olsen, manager of the European Fur Breeders Association, who made it clear that it would be extremely damaging for the industry in Europe if the measure went ahead. They are concerned about compensation in this country.
The only reference to sums of money is tucked away on page five of the explanatory notes. Under the heading "Financial effects of the Bill", paragraph 26 states:
It is estimated that the cost of compensation under the Bill for the current thirteen mink farms could, in respect of assets, be up to £400,000 and perhaps four times that amount if income were to be compensated.
That figure laughably underestimates the true cost of the measure. From a few brief conversations that I have had, it is clear that that would not pay to close even one farm. A farm in the west country has had a quote for £2.6 million on the plant and assets alone. It has had an independent assessor in. The estimated loss of income is £1 million a year. There is the question of returning the site to a green field because the buildings will incur rates. Those buildings will have to be demolished, a point that the Minister might like to pick up. The cost of demolishing the buildings on just one farm would be £100,000.
Therefore, I estimate that that farmer alone would look for at least £3 million to £4 million, which is a large sum. The man has built up the business over 30 to 40 years and invested not only in its physical assets. Fur farmers have invested substantially, although investment has come to a halt in recent years because the Government have said that they would not compensate farmers for that.
As my right hon. and learned Friend the Member for Sleaford and North Hykeham pointed out, the stock is valuable. Farmers have bred the animals, created a brand and developed good will. The businesses have an international reputation. The Bill does not refer clearly to income and there are also the issues of redundancies, wind-down costs and loss making as wind-down takes place. I have already touched on rates and demolition costs, but there is also interest and fees, which we discussed in Committee at some length. They constitute substantial costs and the figure in the explanatory notes cannot possibly be anywhere near accurate,
As a further guide to the figures' inaccuracy—

Mr. Deputy Speaker: Order. I have tried to help the hon. Gentleman, but this is not the appropriate moment for a general discussion about compensation. The debate is about the specific terms of the amendments. I would feel a little more comfortable if he directed his remarks towards the amendments.

Mr. Paterson: Thank you, Mr. Deputy Speaker. The amendments would provide much better terms of compensation than are currently in the Bill. That is the most important point that we are discussing. Will the Bill offer a satisfactory compensation scheme? My answer is no. Would the amendments, as tabled by my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss), improve it? The answer is yes.
I have cited one example that shows that the Bill is simply not adequate as it stands. It will not cover all the costs that I have mentioned. A farm in Austria is the only one in Europe that has been bought out and it cost 4.7 million Austrian schillings to do that. The cost was the equivalent to about £400 for each breeding female. The Bill does not refer to anything like that sum. It does not provide a mandatory compensation scheme.

Mr. Deputy Speaker: Order. I do not think that the hon. Gentleman has taken on board my advice. He should consider not the general amount of compensation, but the mechanisms for compensation that are at the heart of the amendments. He must direct his remarks to the scheme that is proposed in the amendments.

Mr. Paterson: I was saying, Mr. Deputy Speaker, that the Bill does not provide for an adequate scheme. As it stands, it would not come up with anything like the figures that have been proved necessary elsewhere. The figure in the explanatory notes is simply not adequate.

Mr. Deputy Speaker: Order. The hon. Gentleman must take on board my advice. We debate within the Standing Orders of the House and he must follow certain rules. He cannot go outside those rules in the way that he is seeking to do. The amendments have a narrow scope and he must focus on that.

Mr. Paterson: Amendment No. 8 would provide for an independent advisory body. That would provide a more viable basis for compensation. It would touch on some of the aspects that I have mentioned. The proposed subsections (a) and (b) in the amendment touch on professional fees and interest payments, and it also refers to buildings. Those are the most important issues for the farmers who have built up their businesses over the years. They need a thoroughly fair and transparent compensation scheme. The amendment would provide for that.
The only figure that is currently referred to is in the explanatory notes. The Treasury will run rings round the Minister. The compensation offered is not satisfactory.

Mr. Clifton-Brown: Some of the provisions were discussed in Committee, but the replies that we received, although courteous, were not satisfactory in substance. Our concerns therefore need airing again on Report.
On amendment No. 5, as my right hon. and hon. Friends have said, it is essential that in clause 5 the word "may" should be replaced by "shall", otherwise there is no obligation on the appropriate authority to produce a compensation scheme. That would be appalling. I see no reason why the Government should not accept the amendment.

Maria Eagle: I am grateful to the hon. Gentleman. The right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) first made the point, but perhaps I can try again to explain. Clause 5(1) already provides for the Ministry of Agriculture, Fisheries and Food in England to make a scheme, through the use of the word "shall". In Wales, that would be a matter for the National Assembly, but there are at present no fur farms in Wales for which a scheme would have to be made. Although one can see the point of the amendment, it is defective. Does the hon. Gentleman not accept that?

Mr. Clifton-Brown: I entirely accept what the hon. Lady says. The amendment is defective. That shows how


carefully one needs to read an amendment before appending one's name to it. Nevertheless, the spirit of what we tried to achieve through the amendments is clear. If we had the access to the parliamentary draftsmen that the Minister has, I am sure that such an elementary mistake would not have been made.
Before I am led too far down the path of temptation and ruled out of order, Mr. Deputy Speaker, I shall move quickly on to amendment No. 8. Many aspects of the amendment were covered in Committee, but there are one or two that I shall discuss. On the aspects that we raised in Committee, the Minister said that they would be subject to consultation; and that the Bill would provide for them if the Government considered it necessary; but that the Government would give no guarantee that the Bill would provide for them.
That is an unsatisfactory way in which to proceed. As I said on the previous group of amendments, we must be clear in the legislation that we pass. People's livelihoods are to be taken away. It does not matter whether one approves of their livelihood or not. The fact is that we are taking away people's livelihoods and they deserve to be compensated.

Mr. Hogg: I am grateful to my hon. Friend. Does he agree that it should also be borne in mind that this will be the last time—other than when we come to discuss Lords amendments, if we do—that the House will have an opportunity to discuss the compensation scheme? He will have noticed that the scheme is subject to the negative resolution procedure rather than to the affirmative resolution procedure.

Mr. Clifton-Brown: My right hon. and learned Friend makes an interesting point, and if time permits, I may get on to the subject of the negative and affirmative resolution procedures.
Let me return to amendment No. 8. I hope that, as my right hon. and learned Friend said, if the Minister does not accept the amendments this evening or give an undertaking that the Government will move similar amendments in the other place, our noble Friends act accordingly.
It is a fundamental principle of a compensation scheme that professional fees should be paid. No one would argue with that. In any statutory compensation scheme, it should be possible to claim reasonable professional fees. In many cases of compulsory purchase, interest is also paid.
As I said in Committee, it seems entirely reasonable that, since the Inland Revenue and Her Majesty's Customs and Excise charge interest on late tax and VAT payments, if the Government delay paying compensation under the Bill, they should also pay interest. Not only is that equitable: it gives the Government an incentive to agree to the compensation and get it paid as soon as possible. If people's livelihoods are being taken away, they deserve to have their compensation paid quickly.
New subsection (2B)(c) in amendment No. 8 provides for 60 per cent. payment in advance. Again, I declare an interest as one of only two chartered surveyors in the House. I have drawn up such claims in the past. When there are two opposing valuers—as I am sure will be the

case here—it is easy to get to the reasonable quantum of a claim quite quickly, although the parties often disagree about the last little bit and may have to go to arbitration.
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As the Bill will make statutory provision for compensation once it has been amended properly in the other place, it is wholly reasonable that a large proportion—personally, I think that 60 per cent. is about right—should be paid in advance. That will help with the costs of resettlement and so on. Some of the payments may be taxable, so it will help if some money is paid in advance and some a little later.
New subsection (2B)(d) in amendment No. 8 concerns clearing land and equipment. I have been involved in agriculture all my life and I know how quickly buildings can become out of date. I have no doubt that the specialist buildings and equipment will be completely useless for anything else, so it is wholly reasonable that compensation should be paid to allow the land to be rendered fit for other purposes. If the buildings are not demolished, they may well be subject to rates, even though the business is not being carried on. In that circumstance, I have no doubt that the owner or lessee of the land would want to demolish them as quickly as possible.
If the state is forcing people to give up their business, it is right to include the items listed in paragraph (e) in the heads of claim. I have no doubt that expenses will be incurred in cancellation of contracts. There may be long-term contracts and some may even contain penalty clauses in the event of premature termination.
I suppose that "other reasonable disturbance costs" could include loss of income. The Minister needs to come clean about that. He said:
Yes, the Bill allows compensation for income. My hon. Friend's Bill specifically ruled that out. During the discussion that we had in that Committee—because, as I said, the Government must pay in the end—
which is very good news—
I accepted that there would be an amendment that did not bar the consideration of income.—[Official Report, Standing Committee E, 6 June 2000; c. 62.]
In other words, the Government could consider paying for loss of income but were not obliged to do so.
I would contend that, if the Government do not pay for loss of income, the claims will rapidly end up before the European Court of Human Rights as a fundamental violation of property rights. Perhaps the Minister, in declaring that the Bill complies with the European convention on human rights, will tell us how that can be so if he is not providing a statutory basis for compensating loss of income. I look forward with great interest to his response.

Mr. Morley: The amendments are very important. The hon. Member for North-East Cambridgeshire (Mr. Moss) moved them in a reasonable way and made a number of fair points, which we discussed in Committee in some detail and I tried to address in some detail. I also tried to be as helpful as possible, bearing in mind that, as the hon. Gentleman rightly said, the Bill is an enabling measure. The Bill provides powers to make the compensation scheme. It is not appropriate to include enormous detail of the scheme in the Bill. The draft compensation scheme


will go out to consultation and involve independent assessment of its various aspects, to which I shall come in a moment.

Mr. Hogg: If the Minister is right about that—obviously he is, in a sense—would it not be right to use the affirmative resolution procedure? Then the Minister would have to lay a draft scheme for the approval of the House and the House would at least have an opportunity to express a view on it. At present, the probability is that the House will never have such an opportunity.

Mr. Morley: A draft scheme will be produced, circulated and opened to consultation. The right hon. and learned Gentleman will appreciate from his time in government that I follow the professional advice of departmental advisers on the use of affirmative and negative resolution procedures.
I shall deal with the amendments one by one. The right hon. and learned Member for Sleaford and North Hykeham and the hon. Member for Somerton and Frome (Mr. Heath) were right in their interpretation of amendment No. 5. It would extend a requirement to make a compensation scheme to the National Assembly for Wales. That would be superfluous because there are no fur farms in Wales.
I sympathised in Committee with the points made by the hon. Member for North-East Cambridgeshire about the requirement for MAFF to make a compensation scheme in England. That was one issue debated by my hon. Friend the Member for Liverpool, Garston (Maria Eagle) during the passage of her private Member's Bill, on which there was much consultation with the National Farmers Union—when, of course, we listened to points made by fur farmers.
I draw hon. Members' attention to clause 5(1), which states:
The appropriate authority may (and, in the case of the Minister of Agriculture, Fisheries and Food, shall) by order make a scheme for the making of payments.
I have already accepted that that is a cast-iron guarantee that there will be a compensation scheme. I give the hon. Member for North-East Cambridgeshire that assurance.
Amendment No. 6 and the first parts of amendment No. 7 and new schedule 1 address aspects that can perfectly be part of consultation on the scheme. I caution the hon. Member for North-East Cambridgeshire against requiring great detail in the Bill. I know that it is not his intention, but a quest for such detail can be restrictive and make it more difficult to respond to consultation and include aspects that people feel are appropriate. We believe that the current provision is adequate.
As the hon. Member for North-East Cambridgeshire said, there is an appeals procedure via arbitration or the Lands Tribunal—two opportunities. Setting up an advisory body is a complicated and bureaucratic approach to the issue. We have already said that, in drawing up the draft compensation scheme, independent assessors will visit fur farmers to consider what should be part of a compensation scheme and, of course, of the valuation.
Although those assessors will report to MAFF, they are individual assessors—chartered accountants, for example. They are governed by their professional bodies, as those hon. Members who are chartered accountants know well. There is an element of independence within the

assessment that we are proposing, so such an external body, with all the bureaucracy and possible delay that it would entail, is unnecessary.
Amendment No. 8 contains a list of compensation provisions, put forward in the light of the consultation exercise. I made it clear in Committee that many of those are perfectly reasonable and valid. In Committee, the Government accepted much of what was put forward, and the Bill provides the power for such a detailed scheme. However, we are back to the problem that to include too much detail in the Bill would be restrictive in a way that I know the hon. Member for North-East Cambridgeshire would not wish.

Mr. Hunter: I have read and re-read the Parliamentary Secretary's comments in Committee on the issue of compensation, but I cannot see a categorical assurance that loss of income will be reflected in the scheme. Can the Minister clarify that point?

Mr. Morley: The original Bill promoted by my hon. Friend the Member for Garston deliberately precluded compensation for loss of income. In the light of representations that we have received, this Bill provides for compensation for loss of income, and that will rightly feature in the consultation process. The independent assessors will, among other things, assess income when they visit farmers when the Bill receives Royal Assent.
I was tempted by amendment No. 10 in the spirit of moving the Bill forward. I recognise that there are legitimate concerns about compensation, and I can give the clear undertaking that Ministers will not unreasonably withhold agreement to go to arbitration. I am happy to put that assurance on the record.
Amendment No. 11 relates to the time scale for compensation. I repeat that I understand that many fur farmers want a compensation scheme up and running as soon as possible. When I last met them they said that they were anxious to have some clarity about where they stood. If there was to be a Bill, they wanted it to make progress and have it implemented as quickly as possible so that they could make their decisions and be compensated accordingly. That is what we have tried to do. We must have the consultation period. It is a convention that, in general, no Act of Parliament should be brought into operation earlier than two months after Royal Assent.

Mr. Gray: If all the Minister wants to do is to get rid of the fur farmers in the United Kingdom and if he is prepared to pay compensation in order to do so, why does he not just offer that to the fur farmers without passing the Bill? He would then stamp out fur farming at a stroke in this country without any need for the process that we are going through at the moment.

Mr. Morley: There are one two tiny technical problems with that approach, one of which is that one may obtain the agreement of existing fur farmers but, without a Bill to prohibit fur farming, others might set up.

Mr. Ian Cawsey: Without a Bill to outlaw fur farming, what would my hon. Friend be compensating?

Mr. Morley: That is a good point. Without the prohibition of fur farming there would be no grounds for


compensation. We are delivering a pre-election pledge. I recognise the impact of the measure on British fur farmers and that is why, throughout the Committee stage, I tried to incorporate as much detail as I could on compensation. I have tried to be genuinely helpful, almost to the point of bending over backwards, both in Committee and today, to take such matters into account. We intend to do that. I want a scheme to be established as quickly as possible after the Bill receives Royal Assent.
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Until the Bill becomes law, there is no basis for a compensation scheme. I therefore hope that the Bill has a speedy passage through both Houses and that I have dealt with the points that the hon. Member for North-East Cambridgeshire made so reasonably.

Mr. Hogg: Will the Parliamentary Secretary give way?

Mr. Morley: I am afraid that I am about to conclude. I hope that I have answered many of the points that were made.

Mr. Moss: I thank the Parliamentary Secretary for his response, but he did not cover all the points that I made. For example, he did not consider the proposed new schedule in any detail. He talked about special advisers, including a few accountants, but he mentioned no other professionals. I am astounded that even at this stage, he does not consider including other professional advisers in the team that he will send out to undertake the consultation and make the assessment. It will take more than accountants to reach a sensible conclusion.
Who will the accountants be? Will they be Treasury accountants? In Committee, the Minister said that the advisers would not be MAFF people. However, I begin to fear that if the advisers are only a few accountants, they may be from the Treasury. What hope would fur farmers have in that case? I should be grateful if he elaborated on the likely identity of the accountants, and whether he believes that, in the spirit of the proposed new schedule, there should be a balanced and professional team. He did not mention numbers. Does that mean that two, three or more people will be special advisers? A little more detail would have been helpful.
The Minister dismissed the main thrust of the amendments on the basis that they were too restrictive. However, I believed that I had covered that point in amendment No. 7, which proposes setting up an independent advisory body
to advise the appropriate authority—
that is, the Minister—
on all aspects of the scheme.
That, of course, refers to the compensation scheme. I did not believe that there could be a definition more all-embracing than
all aspects of the scheme.
The idea that the amendments would lead to restrictions on the consultation on compensation does not hold water. The amendments are clear cut. The body would deal with all aspects of the scheme. The proposed new schedule

gives details about what should be included. For example, I mentioned income. The Parliamentary Secretary gave assurances in Committee that the Bill allows for income to be taken into account. We agreed that that should happen. We did not table an amendment to that effect because we had received assurances about it.
Any compensation scheme could be cash limited. The Treasury has suggested ball-park figures, of which the Ministry has taken account. The Treasury will not be happy if the upper limit of £1.6 million is exceeded. However, that upper valuation of the 13 fur farms is light years away from the industry's view of the real value of their businesses.
We have heard the example of the Austrian compensation scheme. It is the only one that we currently know about. Its compensation equates to approximately £400 per breeding female. That makes the total value of the United Kingdom fur farming businesses approximately £8 million to £10 million. The Minister assured us that the £1.6 million mentioned in the explanatory notes was not set in stone. We take that assurance with a pinch of salt.
If the Minister simply sends out a few accountants, and the ball-park figure remains the Treasury figure of £1.6 million, not much consultation will take place. The pre-ordained sum will simply be carved up.

Mr. Clifton-Brown: Since I spoke, a document containing the compensation scheme for the Firearms (Amendment) Act 1997 has come into my possession. It took eight months to produce after the Bill received Royal Assent. Does my hon. Friend agree that it would be intolerable if it took eight months to produce the compensation scheme for this Bill, when it will be illegal to keep the animals after 1 January 2003, roughly two and a half years after the Bill receives Royal Assent? Clause 5 will come into effect two months after Royal Assent, and the compensation scheme could take eight months to produce before anyone could start working on a claim. That is unacceptable.

Mr. Moss: My hon. Friend makes a valid point, which he also made in Committee. The Minister has not answered it directly, although he has given some indication of the likely time scale for setting up the scheme and the consultation that will accompany it.
The Minister should respond to some of the detailed points that I have put to him. No guarantees have been given, and the whole purpose of the amendments was to seek clarification and guarantees that key areas of the compensation scheme would be taken into account in the consultation. If the Minister intends to send out only a few accountants, with a ceiling for the scheme of £1.6 million, I fear that the fur farmers will be sold down the river.

Amendment negatived.

Order for Third Reading read.

Mr. Morley: I beg to move, That the Bill be now read the Third time.
I am sorry that the hon. Member for North-East Cambridgeshire (Mr. Moss) did not feel that I gave enough assurances about the compensation scheme, which is, in many ways, at the heart of the Bill, because I tried


hard to do so. This is an enabling Bill and will give powers to bring forward a scheme with full consultation, during which all the points can be raised. In Committee, I also gave a detailed analysis of how we can achieve those objectives.
I thank those hon. Members who have made constructive and thoughtful contributions on the Bill, as well as my hon. Friends—not least, of course, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), who piloted a private Member's Bill on the issue and did much of the preliminary work on prohibiting fur farming in this country. She was very influential in shaping the Bill in its final form. We took account of the representations that were made and tried to address the legitimate concerns that were raised.
We have had a response from the European Union to the Bill, and it did not object to it. I wish to make that clear. Therefore we are within our rights to proceed with it, taking into account our obligations under human rights and other legislation. We are confident that it meets all the requirements that we are obliged to address.
I must say to the hon. Member for North Shropshire (Mr. Paterson)—or perhaps I should say the hon. Member for Denmark, Central—that the Bill does not seek to impose our views on other member states. The treatment of fur farming in other member states is, rightly, a matter on which those countries must make their own decisions. Several other member states share our views on fur farming, the moral issue of how animals are treated and whether animals are being killed unnecessarily. We do not seek to impose our views on other member states, so we are within our rights to say that we do not appreciate it when other organisations and countries wish to impose their views on what we, through our democratic processes, do. I hope that the hon. Member for North Shropshire takes that into account.
In conclusion, I think that the Bill is important. Many people feel strongly about as it deals with an issue of public morality. I am sorry that the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) referred to it as an odious measure.

Mr. Hogg: I said that it was an odious little Bill.

Mr. Morley: I stand corrected. Frankly, I think that the political philosophy that justifies the abuse of animals is odious.
The Bill addresses a real issue of morality concerning the way in which we treat animals. I am grateful for the support that it has received from many hon. Members on both sides of the House and I certainly hope that we have addressed the legitimate concerns that have been raised during its passage through the House.

Mr. Moss: The heart of the Bill is not the compensation clause but clause 1, which creates the offence of keeping animals primarily for the value of their fur. For the first time it criminalises a legal farming activity, which even after the Bill receives Royal Assent will still be legal in the rest of the European Union.
It is incumbent on the Government to give their reasons for introducing such draconian legislation. The Bill proposes a ban on fur farming. What do the Government

tell us by way of justification? Their only justification at the time of the private Member's Bill introduced by the hon. Member for Liverpool, Garston (Maria Eagle) was animal welfare. They have now shifted to a position on public morality. The Minister said in Committee:
we want fur farming to be banned because it is unethical.
He confirmed the seismic shift in the Government's thinking when he said:
arguing purely on welfare grounds is irrelevant.—[Official Report, Standing Committee E, 23 May 2000: c. 34–5.]
There is some inconsistency in the Government's approach. They often use public opinion and opinion polls to justify their course of action. However, public opinion says that the live transport of animals is wrong, yet the Government have found a middle way on that. Public opinion says that the cloning of farm animals is wrong, but again the Government have found a compromise. So public opinion is not an overriding consideration. In our view the fact that a majority of people want fur farming banned is not a reason per se for introducing an offence and banning it.
Setting aside for a moment whether a ban is fair, reasonable or even justified, we must ask whether it is legal in the context of existing EU legislation to which the Government have signed up. It is worth exploring that point. After all, it is surely misguided of the Government to introduce legislation that seems to fly in the face of current EU law.

Mr. Eric Martlew: Does the hon. Gentleman intend to divide the House on this matter?

Mr. Moss: The hon. Gentleman will have to see what happens at the end of the debate.
It is worth exploring the legal position given that the Bill appears to fly in the face of current EU legislation. So worried are the farming and agricultural interests within the EU about the implications of the offence created in clause 1 that they have sought legal advice.
The Committee of Agricultural Organisations in the European Community—COPA—and the General Committee for Agricultural Co-operation in the EU—COGECA—presented a paper of legal advice in which they argue that a ban as proposed by the Government is incompatible with European law on a number of grounds. They cite articles 28 and 29 and of the EC treaty, the principles of proportionality and non-discrimination and a judgment in November 1998 in which the European Court ruled that a member state is not entitled to enact national animal welfare measures once a harmonisation directive or regulation has been adopted. They also cite the common organisations of the market. They argue that where regulations are based on an open market to which every producer has free access, the keeping of animals covered by the organisations cannot be prohibited.

It being Ten o'clock, the debate stood adjourned.

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
That, at this day's sitting, the Fur Farming (Prohibition) Bill may be proceeded with, though opposed, until any hour.—[Mr. Touhig.]

Question agreed to.

Question again proposed, That the Bill be now read the Third time.

Mr. Moss: Powerful and cogent legal advice from lawyers conversant with EU law questions in a


fundamental way whether the creation of an offence of keeping animals for their fur can be made to stick. Without the offence, the Bill collapses and a ban is impossible to implement. That is why it is vital to challenge that crucial element of clause 1.
In our opinion, the paucity of uncontested, reliable and corroborated scientific evidence about mink welfare has caused the Government to drop their animal welfare objections to fur farming, and to switch their justification for the ban to grounds of public morality. On Second Reading and in Committee, the Minister offered various definitions of what the Government meant by the term "public morality". The latest definition came in a written answer of 22 June. The Government admitted:
Public Morality" is not susceptible to an absolute definition: it inevitably involves subjective judgment.—[Official Report, 22 June 2000; Vol. 352, c. 300W.]
The Minister mentioned that the Government had received a letter from the European Commission responding to the six member states that objected to the Government's proposals. The Commission said that countries such as the United Kingdom and the Netherlands should wait for the proposed new EU legislation on fur farming
before taking any unilateral measures.

Mr. Morley: The hon. Gentleman might find it helpful if I clarified that situation. Six representations were received, but only one was an objection. Four countries made observations, and one country wrote in support of the UK position. The EU said that it would be preferable to wait until a forthcoming report on animal welfare was available, but that is irrelevant to the Bill, which is being introduced on the basis of article 30 of the European convention on human rights. That article has to do with public morality, not animal welfare.

Mr. Moss: I accept that the Bill is being introduced in line with article 30, but the Commission has advised the Government to hold on before acting unilaterally in passing legislation. The reason is that the Commission is bringing in new directives and regulations that relate to fur farming throughout the whole of Europe. When those regulations are introduced, it may be even easier for countries to object to what the Government propose in the European Court.

Mr. Hogg: Does my hon. Friend agree that the Government are introducing the Bill now rather than waiting for new proposals from the European Union because it would be extraordinarily difficult for them to bring forward a Bill prohibiting fur farming when a European Union regime is in force?

Mr. Moss: My right hon. and learned Friend makes an excellent point. The Bill represents a high-risk strategy. It must be obvious, even to this blinkered and politically correct Government, that these provisions will be challenged in the European Court by significant numbers of EU member states. That could be a prolonged and costly exercise, and I wonder whether the Treasury will countenance what the Minister is doing.
What costs are likely to arise, and who will foot the bill? No doubt the Treasury will say that any costs of litigation will have to come out of the budget of the Ministry of Agriculture, Fisheries and Food—which we already know is under considerable pressure.
The Bill is, as we know, supported by Labour Members, probably on a three-line Whip. They are determined to oppose fur farming—or, more accurately, those who wish to wear fur as part of a legitimate life style—and they are determined to force their views on the rest of us. I can put it no better than Roger Scruton, who said in a recent article that to imagine that we have the right to outlaw those life styles merely because they get up our class-conscious nose is to base our legislation not on public morality but on private snobbery.

Maria Eagle: I do not intend to detain the House for long, but I wish to make a couple of remarks about the Bill before it goes to the other place, and shortly thereafter, I hope, becomes law.
I welcome the Bill. I listened with care to the debates on my private Member's Bill in the previous Session, and to those at all stages of this Government Bill. We have rehearsed some of the arguments again this evening on Report. However, I note that, despite much of the sound and fury and occasional flights of fancy about furry sheep that we have heard from Conservative Members, at no point thus far in the proceedings of either Bill have they sought to divide the House. It will be interesting to see whether they do so in due course.
The Bill will be welcomed by the majority of the public, by right hon. and hon. Members on both sides of the Chamber, and even by the Fur Breeders Association, which represents all the remaining fur farmers in this country. If I were to confine my feelings about the Bill to one sentence, it is this: I welcome it because it will end the cruel practice of keeping essentially wild animals in extremely small cages merely and solely to collect the commercial value of their fur.
The right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg), who has taken part in many of our deliberations during the proceedings on both Bills, and whom I have listened to with some respect, called this an odious little Bill. I beg to disagree with him: I think that it is a humane little Bill, and I commend it to the House.

Mr. David Heath: I agree with the many right hon. and hon. Members who have spoken at various stages of the Bill's proceedings that it is a pleasure to reach Third Reading, especially having listened to some of the deliberations that preceded it. I congratulate the Parliamentary Secretary on taking up this measure and making it a Government Bill. My view is that it always should have been a Government Bill. By that I mean no disrespect to the hon. Member for Liverpool, Garston (Maria Eagle) or my hon. Friend the Member for Lewes (Mr. Baker), who brought forward a similar Bill previously. However, Government legislation is appropriate in this area.
Fur farming is an anachronism, and the public are out of sympathy with it. However, that is not reason enough to ban what has hitherto been a legal activity, and


Parliament must take that matter extremely seriously. Nor do I think that we should act out of our personal taste or distaste for the activity and its consequences. If I have any difference of opinion at all with the Minister, it is about whether public morality or animal welfare comes first. To me, the public morality lies in the indefensibility, in animal welfare terms, of keeping in a small cage an animal which, as the hon. Member for Garston said on Second Reading, is a solitary carnivore, territorial in nature, semi-aquatic and, in its wild state, used to roaming over large areas of countryside. Given the intensive circumstances that are necessary for fur farming, I do not believe that it is possible to bring the detention of those animals up to standards that are acceptable in animal welfare terms. That is why I think that the Bill is to be welcomed and should command support.
The important issue of compensation is addressed in the Bill. I would not be happy to support it were there not adequate measures for compensation. I have to say that we have heard more from Conservative Members about the European convention on human rights over the past three or four months than in the previous 20 years. It is extraordinary that this measure, the incorporation of which into British law was so vigorously opposed by Conservative Members, is now seen as the touchstone for the appropriateness of every clause and sentence of legislation. Well, so be it.
We have had a declaration of compatibility for the Bill from the Minister. Were is not for the compensation provisions, the Bill would not be compatible with the European convention. I did not seek to intervene on the amendments that we discussed in the previous debate, but I have to say that if the compensation mechanism was unfair in its application or insufficient to meet the legitimate needs of those affected, the Bill would fall foul of the European Court. So it is incumbent on Ministers to get the compensation scheme right, and I am confident that they will do so. It is a prerequisite for completion of the passage of the Bill.
The last point is whether we have to wait for the European Union to take Communitywide action on fur farming. Sometimes we have some topsy-turvy debates in this place, but when I hear the Conservatives argue that we should not take a decision in the British Parliament on what happens in Britain because we must wait to be overruled by the EU, I fail to understand the position of that party on anything. That view is shared by many people across the country.
The Liberal Democrats support the Bill. I honestly do not know what the Conservative position is. We have heard the Bill described as odious, vile, appalling and dangerous, yet it appears that the Conservatives are not prepared to divide the House on it. Could it be simply that, whatever Conservative Members' personal prejudices, they are afraid to divide the House because they know that public opinion is strongly in favour of the Bill? So are we.

Mr. Cawsey: I have some valued friendships on this side of the House, so I shall be brief. I want to say a few words on Third Reading because I missed Second Reading due to an unexpected hospitalisation. While I managed to wangle a discharge to get down here in time to vote, the House did not divide on that occasion, which only shows that one cannot rely on the Conservative party for anything these days.
I congratulate my hon. Friend the Member for Liverpool, Garston (Maria Eagle) on all the work that she has done on the Bill. It is only through her determination that we have reached the stage that we are at today. I thank colleagues in the all-party group on animal welfare, which I have the honour to chair, for its support, and I am grateful for support not only in this House but in the other place. We hope that that means that the position looks good for the future.
Mink farms do not replicate the semi-aquatic environment that mink need to thrive. Mink are difficult animals, as all hon. Members have acknowledged. They are non-indigenous, and they can cause mayhem in the country. Conservative Members made much of recent escapes of mink and blamed animal rights groups for them. I agree with my hon. Friend the Minister that all escapes are to be condemned, but it is worth reminding ourselves that historically the feral population of mink came about as a result of poor husbandry on mink farms, not the activities of animal rights groups. So the fact that we have mink in the countryside now is the fault of neither one side nor the other. They are both responsible and all escapes should be condemned. The point is that the only way to prevent future escapes is to ensure that the Bill becomes law and that mink farms are abolished in this country.
The right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) referred to the Bill as "an odious little Bill" several times. I disagree with him, although it would be wrong not to say that as he was speaking, the words "little" and "odious" were in my mind.

Mr. Deputy Speaker: Order. That was an unworthy remark, and I ask the hon. Gentleman to withdraw it.

Mr. Cawsey: I withdraw it and apologise to the House.
The issue is whether we believe that animals should be kept coley and primarily for the value of their fur. I do not, and I believe that most hon. Members do not. The Bill has warm support in the House, and I hope that it will have support in the other place and that members of the British public will support us for passing it.

Mr. Hogg: I oppose the Bill. It is quite wrong and I do not resile from my comment that it is an odious little Bill. I oppose it on principle and on grounds of detail. I shall deal first with the detail—I can do so quickly as I have already covered it; it concerns compensation.
Let us be absolutely plain about the matter. The compensation set out in the Bill is quite inadequate. There is an obligation on the Minister of Agriculture, Fisheries and Food to produce a scheme—that he must do. However, the Bill includes no provision that any particular element of compensation should be incorporated in the scheme. For example, we have been talking about compensation for loss of income, but there is no mandatory obligation on the right hon. Gentleman or his colleagues to include such a measure in the scheme.
Let us be clear too that, subject to any consideration of Lords amendments, this is the last time that the House will discuss the compensation payable under the scheme because, as it will be introduced as a statutory instrument subject to the negative procedure, we simply shall not discuss it.


The scheme will be introduced by a Department operating within financial constraints, in the knowledge that there will be clawback under its budget. We can be sure that the scheme will be a mean one and that we shall have no opportunity whatever to expand on it. The measure is defective in detail because there is no mandatory requirement to include certain desirable elements in the compensation scheme. That is the first point.
The second point is not central, but it is of some importance; it is in regard to Europe. I have come to the view that we should not impose on British producers and farmers unilateral restrictions on grounds of welfare that are not matched by commensurate requirements elsewhere in the European Union. I know perfectly well that I was a member of a Government who did introduce such provisions. We introduced a range of unilateral measures—in respect of pigs, for example—that were not matched in Europe. That was a mistake. At the time, I made it clear that we should not do that again while I was a Minister. I am very much against imposing on UK producers requirements that are not matched in the EU, nor, indeed, outside the EU.
Those are minor points. My main point is that the Bill is wrong in principle. What is the justification for the Bill? We must ask ourselves that question. There are two possible justifications: the first is on welfare grounds; the second is that the practice is unethical, immoral and so on.
I shall deal first with welfare. I listened carefully to the Parliamentary Secretary. I read several of his observations in Committee. I have also read the speeches made by the hon. Member for Liverpool, Garston (Maria Eagle). She argues the welfare cause rather more than it has been developed by the hon. Gentleman today. However, he made it wholly plain that the welfare arguments are not the crux of the matter. He said that the killing was unnecessary. It is to be banned because it is unethical.
If we were debating the issue on welfare grounds, I should have more sympathy. It is at least possible that mink cannot properly be kept in conditions of captivity. If that were so—if it were a proven fact—I should give serious consideration to a prohibition. However, that is not the case that is being put forward, because—I suspect—of the European dimension.
It could also be said that the animals can be kept only in certain prescribed conditions that might have the effect of making the business uneconomic. If that was the position, I would give that serious consideration too, because if the Bill had a genuine welfare foundation, it would be proper for the House to respond. But I do not actually believe that that is the position.
The position that I believe to be the case—and, to be fair to the Parliamentary Secretary, it is the position that he declared in his Third Reading speech—is that he regards the keeping of these animals for fur as immoral, unethical and improper. In other words, he is elevating his own moral judgment—and, to be fair, that of his hon. Friends too—and saying that because they deem it to be unethical and improper and immoral, it should be made illegal. That is where I really do part company from the hon. Gentleman, on the ground of principle. I believe profoundly in liberty, and in a free society people do have a right to do those things of which other people

disapprove. It is not a free society if the individual is allowed to do only that of which the majority approves. Within a free society one has a right to sin; one has a right to choice; one has a right to make these moral elections. We are being denied that right, and I say that that is profoundly—

Mr. Martlew: The right hon. and learned Gentleman obviously feels very passionately about this. Does he intend to divide the House on the matter?

Mr. Hogg: I will give an honest answer: no, I do not, because I do not have the troops. [Interruption.] The hon. Member for Falmouth and Camborne (Ms Atherton) may find that funny; I am answering the question. I do not intend to divide the House, because the troops are not here with which to divide the House. The point, none the less—[Interruption.] I can be accused of anything, but I cannot be shouted down. I propose to assert a principle.

Mr. Deputy Speaker: Order. Let me assure the right hon. and learned Gentleman that he will have the help of the Chair in ensuring that neither he nor any other hon. Member will be shouted down in this House.

Mr. Hogg: We are at risk of losing a principle. In a free society, people do have a right to so order their affairs as to do that which they wish to do, unless there is a compelling reason against it. I ask, what is the compelling reason in this case? We know full well that many species and classes of animal are kept in unsatisfactory conditions or in conditions which are not natural, for the use of mankind. We keep chickens in battery cages.

Mr. Morley: I want to make it very clear to the right hon. and learned Gentleman that, in coming to a position of public morality, issues such as welfare and the impact on the environment are all part of taking into account the morality of a decision. Any kind of rearing system which has the effect of animals chewing off their own tails is questionable ethically and morally. How far does the right hon. and learned Gentleman take his position about the freedom of individuals? Is he arguing that people should have the right to use drugs, for example?

Mr. Hogg: The Parliamentary Secretary has given the game away, because if he wants to talk about the conditions of animals, he had better address the keeping of chickens in battery cages. [HON. MEMBERS: "We are."] We are, but let me remind the hon. Gentleman how we are—

Mr. Keith Bradley (Treasurer of Her Majesty's Household): What did you do? Did you do anything?

Mr. Hogg: We did, in fact. We pushed forward within the European Union and secured a new regime on the size of cages and the conditions. The point is that in regard to the keeping of chickens in battery cages, which I have always found a rather disagreeable practice, the approach that the House has taken in the past, and the approach that the European Union has taken, has been not to prohibit that but to require a higher standard of husbandry.
We are entitled to ask why this distinction of principle is being made as between, for example, the keeping of chickens, which is the example that the Parliamentary


Secretary chose, and the keeping of mink. It is not good enough for the hon. Gentleman to say that questions of welfare go to the questions of public perception of morality, because in one sense they do but it is not his primary argument. Had the issue of welfare been the primary argument, that is what he would have advanced as the primary cause. In fact, he and his colleagues do not like keeping mink for the purposes of fur wearing. I suspect that they do not like individuals wearing fur—I am pretty agnostic about the wearing of fur, save that I do not want endangered species to be eliminated.
People who take that view should try to persuade people not to do it. That is persuasion. They should not use the criminal law to impose on their fellow citizens their own moral prejudices, which is wrong. [Interruption.] I hear wails, moans and groans from the Opposition and I am not in the least surprised. One of the characteristics of this Labour party is that it fails properly to weigh up the rights of fellow citizens. The Conservative party stands for freedom and liberty—[Interruption.] Oh yes it does, and the jeers and the restrictive measures—the proposed fox hunting Bill—come from members of a party who want to impose on their fellow citizens a narrow morality.
I am against the Bill and I hope that in another place it will be deeply amended and—even better—thrown out.

Mr. Gray: My right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) made a powerful and unanswerable libertarian argument. The catcalls and grins from Labour Members demonstrate that they do not understand libertarianism. They do not understand freedom of the individual; all they understand is central control and imposing their view of morality on the rest of us.
I hold no particular candle for fur farmers. I have none in my constituency. I am sorry to say that I think that I own no fur and neither does my wife. I have no reason to believe that fur farming is necessarily a good thing. My opposition to the Bill is based not on the principle, but on the Bill's sheer illogicality.
I see the hon. Member for Liverpool, Garston (Maria Eagle) returning to her place. [Interruption.] I was not implying that she had left it. I was about to, but then realised that she was delivering a note to the attendant, so I forgive her. I did not intend to impugn her attendance record. She has been here throughout the debate and has diligently pursued the matter for about three years, so I was not suggesting that she was slacking in any way.
When the hon. Lady brought her private Member's Bill to the House, her primary argument was animal welfare. She said that it was the wrong way to bring up these animals, it was disgraceful and it should not happen. That may well be a powerful argument. I am strongly committed to improving the standards of animal welfare wherever we can. However, that being so, there are many ways to do it by regulation: improving the way in which these animals are brought up.
There are about 8,000 mink farms in Europe. We have 12 or 13 in this country and, by banning them, we will not be improving the lot of the 500,000 mink, or thereabouts, in Europe. It will be a politically correct gesture within these shores that will achieve nothing for animal welfare. Indeed, one could argue that we are

harming animal welfare, in that we are exporting the production of fur. We are saying that we do not want it here, but will be happy for it to continue in Russia, which is one of the biggest producers of mink—mink produced under some of the worst conditions. One might argue, as I think my right hon. and learned Friend the Member for Sleaford and North Hykeham did, that if we are concerned about animal welfare, we should encourage good practice here, where we can control welfare standards on the farms, rather than exporting them to Russia, Mongolia and elsewhere.
An interesting change came about between the Bill introduced by the hon. Member for Garston and this Bill. It was first raised by the Parliamentary Secretary during a MAFF press conference on the issue and he has raised it several times today. We have got away from the animal welfare arguments. I think that the Government realised that they were not sustainable. If one is talking about animal welfare, this measure is not the way to put that right.
All of a sudden, the Government raised the issue of public morality. Let us think for a few seconds about that. First, what is public morality? Their arguments on this Bill, on fox hunting and on other measures of the sort are that the practices that should be banned on the grounds of public morality are practices that the majority of people dislike. They constantly talk about polls and say that 80 per cent. of people in the United Kingdom dislike fur farming. They also use that argument against fox hunting, saying that the majority of people in Britain dislike it.
I would argue that true public morality is about looking after the interests of the minorities—the small battalions—and the people who cannot look after themselves. For the Government to ban something because most people say that they want it banned is to abdicate their responsibility and to say that they are unable to make decisions on behalf of the people, so they will govern by opinion poll.
The Bill puts the Government in a peculiar position. We know that the business of the House and the other place is in the most appalling logjam, and all kinds of rumours are circulating in the Corridors as to whether or not the Government will be able to complete the passage of their important Bills. Even my constituents are asking why, if that is the case, we are wasting our time dealing with this Bill. There are only 13 fur farms left in the United Kingdom. Even if the Government hate fur farming, we should be dealing with health, education, law and order, and defence. [Interruption.]
If Labour Members will listen, I will suggest a reason why we are dealing with this Bill. It has nothing to do with animal welfare or public morality, which the Government have not got around to defining; it is about political correctness. They want to demonstrate that they are friends of the cuddly animal, but the Bill is the enemy of the cuddly animal. If they raised the standards of UK fur farms, they would be friends of the cuddly animal.
There is a further fundamental illogicality in the Bill. The Government could come to the House and say, "We hate the wearing of fur. We believe it to be immoral. Fur is a disgrace. We shall ban the sale of fur in Harrods and the wearing of fur in public places. We shall ban the international trade in fur." Most of that trade is conducted in London. If the Government said that, I would wholly disagree with them and think it an absurdity, but it would


be an intellectually honest thing to say. The Government have introduced such bans on ivory and on the importation of certain animals. They have said that the trade concerned is immoral and disgraceful and that they will not have it—but they will not do that in this case.
The Government know that the wearing of fur is on the increase in the United Kingdom, as are the sales of fur in Harrods and elsewhere. Fur is imported from Russia and sold to America, but the trade is conducted here in London. The Government are not banning that. They do not have the moral courage to say that it is a disgraceful activity and that they hate fur. All they say is, "We know a group of 13 farmers and we believe that, politically, we would achieve an awful lot by coming down heavily on them. Despite the fact that there are 8,000 other fur farmers in Europe, we can demonstrate that we are hard on such people. We are politically correct, wonderful new Labour and we will sort out the ills of the world by wasting parliamentary time dealing with something in which the people are not the slightest bit interested." [Interruption.]
Once again, we see new Labour for what it is. All that Government Members can think about is whether or not it is time to go home. We are ready to discuss these matters for as long as it takes, and if we divided the House, as one Member has constantly suggested we should, Third Reading would take considerably longer than it otherwise would. Before he leaps to his feet, I should say that I have not discussed the matter with my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss), but as far as the Conservative party is concerned, this is a matter of individual conscience and there is no Whip on it.
I, for one, will not seek to divide the House because it is important that we should make these powerful arguments, and I am confident that noble Friends and peers from other parties will want to develop some of them in the other place. They will want to point out the illogicality in the Bill and its incipient and unpleasant political correctness. They will want to try to sort out compensation for the victims of that political correctness. They will seek to correct this badly drafted Bill, which was introduced not for reasons of animal welfare or public morality, which the Government have not defined, but simply to try to brush up the Labour party's rather tarnished credentials. It is an attempt to extend the Under-Secretary's career of political correctness and to achieve what he has sought throughout his life, as an animals rights activist, and to ban something—

Mr. David Taylor: Will the hon. Gentleman give way?

Mr. Gray: I am sorry. I am winding up my speech. Anyhow, the hon. Gentleman has not been here all evening. He wants a little quote for his local paper. I will not give way to him for that reason. He might like to attend for the entire debate. If he wants to take part in the debate, he should attend for the entire debate and not walk in and try to intervene on an hon. Gentleman's peroration.
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food has spent a lot of his life campaigning for what he describes as animal rights. He

has spent a lot of his life saying that animals are sentient beings and have the same rights as us. His friends in the animal rights movement are for ever saying—it is one of their famous quotations—that a dog is a cat is a human being; there is no difference between them. I do not agree.
My father used a great expression which annoyed my mother a great deal. There was nothing sexist in the remark. He used to say, "Men are the lords of creation." He simply meant that human beings are the lords of creation. I believe that to be the case.
I believe it reasonable that human beings should use animals' meat to eat and their fur to wear. None of that seems unreasonable. The Parliamentary Secretary thinks it is, but he should not use such a Bill to expose his personal prejudices and to impose on people out there, as my right hon. and learned Friend the Member for Sleaford and North Hykeham convincingly argued, a Bill that will interfere with individual liberties and achieve nothing for animal welfare at all.

Mr. Paterson: It is a pleasure to speak on the subject. I think that it is for the last time, as we have thrashed the matter out over many months. I declare that I have no constituency interest in the matter. I used to be remunerated in the leather trade. I stress that there is no connection between the leather trade and the fur trade because the leather trade processes a by-product of the meat trade. We are discussing the banning of raising animals specifically for fur.
I believe that a pluralist society cannot be run peaceably if the majority abuse their power over the minority. We are talking about a tiny number of people: 11 fur farmers own 13 fur farms, as against 8,000 fur farms on the continent, where, as I have said, it is a significant business—fur farming makes up perhaps 4 per cent. of Danish GDP.
The central nonsense of the Bill remains. I know that Labour Members do not seem to like evidence from Europe this evening, but I have a fax from the marketing department of the Charente Maritime Department in France. It states that 40 per cent. of rabbits are raised for meat and 60 per cent. for fur.
That is the central nonsense of the Bill. If it is passed, a British citizen could be fined £20,000 for keeping a rabbit in a cage, despite adhering to a raft of UK and European regulations. Exactly the same rabbit could be kept in the same cage and could be legally sold on for a profit. The difference is that the first rabbit would be killed for its fur and the second for its meat. That is totally illogical. Labour Members have failed to address that at any stage on the numerous opportunities that they have had to do so.
I do not want to go into the great raft of regulations governing those animals. If there were a case of animal cruelty, we could consider banning the activity, but the man in charge of ensuring that the activity is not carried out cruelly is sitting before us. He is the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food. He is in charge of the Mink Keeping Order 1997, the Agriculture (Miscellaneous Provisions) Act 1968, the Welfare of Animals (Slaughter or Killing) Regulations 1995, the 1991 Council of Europe convention on the protection of animals kept for farming purposes, and the EU directive on farm animal welfare.
The Parliamentary Secretary is the man who should be ensuring that there is no cruelty. There is a library of regulations that he should be enforcing. If there is cruelty, he is the man in charge and at fault, but no one in the course of debates on the Bill has talked about animal cruelty. Members have fallen back on something extraordinary called public morality, which appears to come down to the ability of the majority to trample wilfully on the minority for doing something that they do not like.
It is immoral to force the United Kingdom into what might be a huge legal battle with determined, well financed industrialists on the continent. As I have said, there are 8,000 fur farms on the continent and they have substantial financial resources. They have made it clear to me that they will confront the UK Government head on. They are convinced that the measure is incompatible with the European convention on human rights and that it breaches articles 28 and 29 of the EC treaty: the principle of proportionality and the principle of non-discrimination. They have made it clear that they are determined to stop it.
Today, I received a telling message from Wim Verhargen. He said that he was still determined to stop this measure in the European Court and that it was ridiculous to be able to buy a Government. He added that it was not a welfare discussion. He said that it opened the door to banning many other activities on the ground of public morality and that it was a very dangerous precedent to ban an economic activity in which welfare was not a problem. I heartily endorse that view.
The conditions for compensation are wholly inadequate. They are not detailed enough and they are not mandatory. The figures mentioned in the explanatory notes are derisory. I talked today to Mr. Gunter Pfeiffer, the only fur farmer in Europe to have a farm closed. Unfortunately, it was an extremely crackly mobile phone line and, although I learned my German in Vienna, he spoke with a strong Austrian accent. Still, the gist of the matter is that he was paid to cease his business. Although the law still allows fur farming in lower Austria, he was

paid a lump sum of 4.7 million Austrian schillings to close his farm. To show what a pointless exercise that was, he moved his whole operation to the farm that he already owned in the Czech Republic, just 30 km away.
Exactly the same thing could happen in the United Kingdom. We have a large farm in the south-west that has a sister operation in Denmark. There will be no sum gain to mink happiness. Instead, there will be a huge bill to the British taxpayer. If there are about 25,000 female animals in UK mink farms and it costs £400 to compensate for each of them, the overall cost will be just over £10 million. That is a long way from the figure mentioned in the explanatory notes.
I do not believe that the Minister has gone into the issue in detail. For him it is a great victory. We know that the Labour party has received sums from animal welfare groups and that it considers it a triumph to get the Bill through. The Minister will be congratulated by Labour Members. However, it is immoral to spend a whole evening debating this issue when this country faces many much greater problems. We may have to spend £10 million of taxpayers' money to compensate for a business that is legal on the rest of the continent. The Bill is unsatisfactory, because it will launch the Government headlong into a lengthy and expensive legal battle with our European partners.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

PARLIAMENT

That the draft Attorney General's Salary Order 2000, which was laid before this House on 15th June, be approved.—[Mr. Pope.]

Question agreed to.

Agricultural Wages Boards

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]

Dr. Gavin Strang: I am grateful for the opportunity to raise the issue of the agricultural wages boards at a time when the Government are considering the future of the boards as part of the quinquennial review that they are required to carry out by statute.
My guess is that this is the first debate to take place in the House of Commons on the agricultural wages boards since devolution. My right hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food has direct responsibility for the Agricultural Wages Board for England and Wales, but the arguments that I deploy have equal force in Scotland and Northern Ireland where the decision is for the devolved Administrations.
British farm workers are skilled workers who deserve a decent rate for the job. I am sure that nobody would disagree with me on that point. However, individual farm workers are in an exceptionally weak negotiating position with their employers. They tend to be geographically isolated, operating in remote locations. They usually work alone or alongside just one other worker, and often their house goes with their job. About a third of agricultural workers live in tied accommodation, and in some parts of the country the figure is higher than that. There is little mobility of labour, and the social relationship between the farmer and the farm worker can bring its own pressures.
That is why the agricultural wages boards are so important. The boards provide the forum where both parties in the agricultural industry negotiate alongside independent members to reach an annual agreement on farm workers pay and conditions. The Government and the devolved representative bodies are currently considering the future of the boards under their quinquennial reviews. I am grateful for the opportunity to urge that the boards be kept, and that the Government explore options to expand their scope.
There has been a historical consensus of support for the agricultural wages boards across the farming industry and within the rural economy. Farmers do not want a minority in their midst undercutting them by paying exploitative wages, and they appreciate that the boards remove the time-consuming and stressful work associated with annual individual pay negotiations.
Furthermore, unlike other industries, farmers receive large sums of money from the taxpayer in the form of subsidies. It has long been accepted that as a quid pro quo, farmers should be required to provide statutory minimum rates of pay and conditions. Indeed, the Corn Production Act 1917, which first established the Agricultural Wages Board for England and Wales, also fixed minimum guaranteed prices for cereals.
The fact that the farming unions are currently split on the future of the boards is due to the crisis in the industry. That is understandable, but the crisis in the industry should not be used as a reason for abolishing or weakening the agricultural wages boards. The current trough, though deep and damaging, must be temporary. Farmers are under great pressure to cut costs, and a regrettable but defensible response would be to reduce the

working hours of a farm worker when less work needs to be done on the farm. However, it would be indefensible if the farm worker's rate of pay were eroded.
Although the National Farmers Union and the National Farmers Union of Scotland report that their members currently want the boards abolished, the Country Landowners Association, the Farmers Union of Wales and the Transport and General Workers Union—the rural and agricultural workers union—are supporting the boards.
Policies that prevent the exploitation of rural workers, of course, have support which extends beyond the organisations that represent the industry. My right hon. Friend will be aware of the strong support expressed by the parliamentary Labour party agriculture committee for the continuation of the boards with at least their present responsibilities.
As well as the provisions of the agricultural wages boards, farm workers are protected by general employment law. It is to the credit of the Labour Government that employment law is much better than it was when last the future of the agricultural wages boards was up for review. The national minimum wage and the working time regulations are in place.
However, the improved legislation is in no way a substitute for the boards. The national minimum wage and the provisions of the working time regulations are intended as a floor below which it would be wrong to employ workers.
The agricultural wages boards are entirely different. First, I make the point again that the boards provide the forum where both parties in the industry reach an agreement on the pay and conditions of farm workers which reflects the state of the agricultural industry. The Country Landowners Association states that it is
extremely important that the industry should continue to regulate the level of pay for agricultural workers and be able to take into account the peculiarities of employment in agriculture.
Secondly, the boards provide far more than the national minimum wage and the working time regulations, as is set out so clearly in the Government's consultation document. The agricultural minimum wage is higher than the national minimum wage. The standard agricultural adult hourly rate is £4.57 in England and Wales, £4.42 in Scotland and £4.38 in Northern Ireland, compared with the adult national minimum wage of £3.60.
The board in England and Wales sets down rates of pay to reflect the skills of farm workers. In an industry where a career structure is difficult to establish owing to the small number of workers in each unit, this provides an incentive to train. The Farmers Union of Wales said:
rewarding qualifications, levels of responsibility etc is a vital means of persuading high-calibre people to remain in or enter the industry.
The boards set overtime rates. That is very important, as the average working week for a farm worker in England and Wales is 48 hours. They set a better working week, better sick pay, better holidays and rest breaks, a rate for working at night, a better rate for tied accommodation, an allowance for keeping a working dog and holiday entitlement for working Sundays. They also provide for paid paternity, adoption and bereavement leave.
The provisions of the wages boards are certainly better for farm workers than the national minimum wage and working time regulations, but it would be wrong to


imagine that they have been over-generous to farm workers. It must be remembered that they contain equal numbers of representatives of both farm workers and farmers. The minimum agricultural rate stands at about the same proportion of average male earnings as it did when the current board was established in 1947, and average pay in the agriculture, hunting and forestry sector is still £129 less every week than the average weekly pay in manufacturing.
If the boards were abolished or weakened, not only agricultural workers would suffer. The board rates are used as a benchmark throughout the rural economy. I understand that the Country Landowners Association has an agreement with the TGWU to recommend to all its members that they pay their staff the AWB rates. Furthermore, if farm workers receive less pay, it will mean more rural social exclusion, less money spent in the rural economy and a greater cost to the state through the working families tax credit.
The last time the boards were reviewed, the Conservative Government threatened to abolish them altogether. Their intention was clear from the letter covering their consultation document. It said:
On the basis of its view that statutory wage fixing arrangements distort the labour market and destroy jobs, the Government has already taken steps to eliminate statutory wages controls in other sectors where they exist.
The Labour Party campaigned alongside the farm workers, other parties and indeed the farmers, to save the boards. We said that we would keep the them. I refer my right hon. Friend the Minister to Labour's general election policy handbook, where she will see the question:
Will Labour keep the Agricultural Wages Boards?
The answer given is "Yes." We also knew that it was crucial that the boards were not weakened but that their role was maintained. In our policy document "Reforming the Common Agricultural Policy", we said:
We see their continuing role as crucial to long-term prosperity within the industry.
The agricultural wages boards perform a most important service for farm workers, for the agricultural industry and for the rural economy. It would be a great mistake to weaken or abolish them.
There is a strong case for saying that the boards should be harnessed to do more: I commend to my right hon. Friend the proposal that their scope be extended to cover all workers in the rural economy who currently undertake agriculture-related jobs—gamekeepers, estate workers and so on. She will also be aware that there is a strong body of opinion that the boards should be used to develop a decent occupational pension scheme in the industry.
I understand that the Government are currently considering their review of the wages boards. I appreciate that my right hon. Friend will not be in a position to announce the outcome tonight, but I hope that she can give us a preliminary indication of her thinking.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): I am grateful to my right hon. Friend the Member for Edinburgh, East and Musselburgh (Dr. Strang) for initiating this debate. We all recognise his enviably long record in campaigning for improvements in the working conditions and

remuneration of agricultural workers. He has taken an interest in those matters for longer than I have been in the House.
The debate gives me a welcome opportunity to update the House on the review of the operation of the Agricultural Wages Board and the agricultural wages committees. The review obviously includes a review of statutory wage and other employment provisions that obtain in agriculture and horticulture. My right hon. Friend mentioned devolution. I am primarily concerned with the arrangements in England and Wales and my remarks should be interpreted in that context, but right hon. and hon. Members will wish to note that a parallel review of the separate agricultural minimum wage arrangements in Scotland is also being conducted.
I know that my right hon. Friend is familiar with the history of the Agricultural Wages Board, which has served us well over a long period. It was established in 1924 and has played an increasingly important role in setting minimum rates of pay and other terms and conditions for agricultural workers.
In the early days, the board, working with the agricultural wages committees, was responsible for fixing minimum rates of pay, overtime rates and the value of payments in kind. The power to fix holidays with pay came in 1938, and the power to introduce agricultural wages sick pay came as recently as 1967. In 1975, the board was given the power to fix other terms and conditions for employment for agricultural workers, and in 1999 we imported the better enforcement arrangement, which was provided under the National Minimum Wage Act 1998, into the agriculture system.
In looking at the current agricultural wages order, which came into force in England and Wales on 1 June, one can certainly recognise the wide range of issues covered by the board. Those include minimum basic and overtime rates for standard workers, flexible workers, casual workers and several categories of young workers. The order provides a career structure for the industry by setting higher minimum rates for workers with particular qualifications and for workers with special responsibilities. Those relate both to the farming side of the business and to staff management. Workers on stand-by duty, on a day when they do not normally work, or those doing night work, perhaps during lambing or other busy times of the year, are entitled to a prescribed minimum payment.
My right hon. Friend also mentioned the dog rate. When I first heard of that I wondered whether it was some minimum wage for dogs, but of course, as he said, it is a payment to agricultural workers who are required to keep working dogs, in recognition of the additional costs they must bear.
The current order deals with rest breaks; additional holiday days for workers who normally work overtime on a Sunday; holidays and other leave, including public holidays; the new service holiday; bereavement, paternity and adoption leave; and the payment of agriculture wages sick pay. Those arrangements help to ensure that agricultural workers are given fair terms and conditions of employment and are treated fairly by their employers. The arrangements recognise, too, that agricultural work is highly skilled, demanding and, as we know, frequently dangerous.
Since the election, this Government have made significant changes in the protection offered by general employment law. Those apply to all workers, including those covered by the agricultural wages order. The Government introduced the working time regulations, which place a limit on average weekly working hours and entitle workers to minimum rest periods and rest breaks and to paid annual leave.
A year later, we saw the introduction of the national minimum wage. There has also been legislation entitling workers to unpaid time off in certain circumstances, and dealing with part-time work. The result is that all workers are much better protected than they were when the Government came to power.
While ensuring that we protect employees, we have also sought in various ways not to over-regulate businesses—which is important in agriculture as well as in other sectors—and to look at issues of competitiveness. We know that some sectors of agriculture receive particular levels of subsidy from the European Union. Others, such as horticulture, pigs and poultry, have to compete freely, often against cheap imports from countries outside the EU.
However, a recognition of costs and the competitive factors never justifies exploitation, and it certainly does not justify any illegal activity such as the exploitation of illegal immigrant workers. I make that point because I know that there is interest in the House in some of the activities of gangmasters in the agricultural sector which have been discovered. The Government take those issues very seriously.
In May 1997, we began work on the issue, investigating gangmasters and their way of operating, and a year later we launched Operation Gangmaster as a way of joining up the enforcement activities of seven to eight agencies covering all aspects of employment law, taxation and benefits. We began that in a pilot area and we are now extending it to six other areas.

Mr. Alasdair Morgan: The right hon. Member for Edinburgh, East and Musselburgh (Dr. Strang) said that the wage rates set by the Agricultural Wages Board were in excess of the minimum wage under the National Minimum Wage Act 1998. Yet in rural areas, average earnings are very much below average earnings in urban areas. Does that not make the case for the Agricultural Wages Board to be strengthened and for its role to be broadened rather than diminished?

Ms Quin: In the course of the review, we are considering various proposals, not just in relation to the board's core activities but in relation to related issues. There is at least some evidence that, in rural areas, the agricultural wages committees have the beneficial effect of setting an example to other employers. It is important to take that into account.
I pay tribute to the work done by the Agricultural Wages Board over the years. It has been well served by the generation of representative members, particularly those nominated by the Transport and General Workers Union, of which I am a member, by the National Farmers

Union, and by the independent members. I know that the members on the board have given a great deal of time and thought to the board's work.
I also know that the board has been quick to acknowledge the recent changes in the general employment law, and that it has taken steps to ensure that there is no conflict between the wages order and the general law. In 1998 and 1999 it made two orders to keep abreast of the changes. This year, the board has brought the holiday provisions as closely into line with those in the working time regulations as possible under the board's current powers.
The Agricultural Wages Board, like all other non-departmental public bodies, is subject to regular quinquennial reviews. That gives us a chance to take a fresh look at all aspects of the policy and the operation of the current arrangements. I recognise that such reviews can be unsettling, but they have an important role to play in ensuring that Government policy meets current needs, and that the work of those important organisations is regularly reviewed.

Mr. Roy Beggs: Reference has been made to England, Wales and Scotland, but I am sure that the Minister will agree that the same provisions should apply to agricultural workers in Northern Ireland.

Ms Quin: Obviously, the principles that we are discussing are important in all parts of the United Kingdom, but I do not want in this debate to trespass on the responsibilities of our good colleague, Brid Rodgers, whom I was pleased to see return to her agriculture and rural affairs portfolio in Northern Ireland.
My right hon. Friend the Member for Edinburgh, East and Musselburgh made a number of comments to which it is important I respond. In general terms, the results of the consultation process are not wholly surprising. Obviously, the trade unions and representatives of agricultural workers strongly support retention of the board. The NFU has advocated its abolition, while some other employer organisations, and some individual employers have backed its retention, but some have put forward ideas for modifications to the current arrangements.
My right hon. Friend mentioned the views of the Farmers Union of Wales, which supports the board. On the other hand, the Horticultural Trades Association saw little need to retain it. The Country Landowners Association believes that it serves a useful purpose, although it and the Tenant Farmers Association made some proposals for change. That is a broad-brush account of the response, which contained a great deal of detail and is currently being considered thoroughly.
An independent research project also examined the impact of the current arrangements on employers and their workers. My right hon. Friend expressed some anxiety about that procedure, but that approach has been applied to at least one review of the Agricultural Wages Board, and to other normal quinquennial reviews. Again, I would not like to suggest that the approach to the review that we are considering was unique. The opposite is the case.
I understand the desire for an early announcement on the board's future. I recognise the strong belief of many


hon. Members of all parties in the work of the board. I know about the recent early-day motion tabled on the subject, which shows strong support from colleagues. However, we want to do the review process justice. I hope that my right hon. Friend and other hon. Members appreciate that the issues that the review raised mean considering a range of social, employment and competitiveness matters.
I assure my right hon. Friend and other hon. Members that their points are being given due weight in the current deliberations. I hope to be able to announce the outcome of the review as soon as possible.

Question put and agreed to.

Adjourned accordingly at seven minutes past Eleven o ' clock.